Fire crews and police rushed to Balotelli's five-bedroomed home in a select area of Cheshire after a blaze started when fireworks were let off in the bathroom at 1am on Saturday morning.
The latest incident to involve the controversial 21-year-old Italian will infuriate his City manager, Roberto Mancini, as he prepares the Premier League leaders for their crucial showdown with neighbours United.
Blaze: The bathroom window (above door) at Balotelli's house is boarded up
Unpredictable: Balotelli has had colourful spell in Manchester in his short time at the club
Balotelli was reported to have told club officials that he and four friends had been letting off fireworks through an open window at the house, which had been advertised for rent at ?7,500 a month.
Bathroom towels were set on fire and the blaze spread but Balotelli has insisted that he did not cause the fire and that the offending firework was let off by his friends.
On Saturday night he was staying in City's team hotel with the rest of the squad and Mancini will consider him for selection at Old Trafford.
A club spokesman said: 'We can confirm there was an incident at Mario's house which the fire brigade attended. Nobody was injured and Mario trained as normal with the rest of the squad on Saturday morning. He spent Saturday night with the rest of the team at a hotel and is available to play on Sunday.'
Madness: Fire crews had to use breathing apparatus to extinguish the flames
City were made aware of the incident on Saturday morning after Balotelli contacted the club's player care unit.
Two fire crews using breathing apparatus put out the blaze, which was described as 'a substantial fire' on the first floor.
The property sustained serious fire and smoke damage and police on the scene prevented Balotelli from going back into the house to retrieve belongings.
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Frustration: Balotelli has had run-ins with team-mates including Nigel de Jong
A police spokesman said: 'At just before 1am on Saturday we were called to a report of a fire at a residential home. Police provided assistance to Cheshire fire and rescueservice as well as ensuring residents were accounted for and there was no danger to surrounding properties.
'The cause of the fire is being examined by fire investigators and the police. However, it is not thought to be suspicious.'
Manchester blues: Balotelli said in the summer he was not a fan of the city of Manchester
Run-ins: Balotelli and manager Roberto Mancini have not always seen eye to eye
A statement from the fire service said: 'Four breathing apparatus and two hose reel water jets were used to deal with the fire and a large fan was used to clear smoke from the property.
'Crews managed to put out the fire within half an hour of arriving but remained at the scene until 2.45 am to prevent any possible flare-ups. Smoke alarms were fitted at the property and the occupiers were able to get out unharmed. The fire was caused by a firework.'
Balotelli has been the subject of controversy since his ?24m move to City from Inter Milan in 2010.
He crashed his car soon after arriving and was reprimanded for throwing darts at the training ground.
He insisted in an interview last weekthat he was growing up and would steer clear of controversy to concentrate on the Manchester derby.
He recently moved from the city centre and said he was living in the countryside for a quieter life.
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