Villa rejected a £20million bid for Milner from City who are now poised to increase their offer.
In demand: Manchester City target James Milner
Dunne fears Milner, 24, may not start many games. The Irishman switched to Villa from City last summer following the signings of Kolo Toure and Joleon Lescott.
He said: 'Manchester City is a really big club now, but the problem they will have is they will have a lot of top players - £20million is nothing to them.
'It's just another player really, so it's whether you are going to get enough game time.
'There are always bigger clubs with more money who can offer him maybe Champions League football so it will be difficult.'
Dunne suggested if a player such as Stephen Ireland is struggling for game time then Milner should consider his options.
Ireland is said to be ready to quit and Dunne added: 'Stephen wants to play more regularly. If that's not at City, he would be more than welcome at Villa.'
Milner will be off to City if the price is right, admits Villa team-mate WarnockSign him up, Martin! Dunne urges Villa to snap up unhappy City star IrelandJohnson credits Manchester City move for giving him dream of playing at finalsASTON VILLA FC