With Emmanuel Adebayor having now joined a summer influx of talent to Eastlands which already includes Carlos Tevez, Roque Santa Cruz and Gareth Barry, City manager Hughes must now focus on his defence.
Terry, the Chelsea captain, has been identified as his number one target and an offer of around £30 million was recently turned down.
"It's well documented that we put in a bid and that was rejected," Hughes said. "He's a player I know, I played alongside him at Chelsea and I admire him as a person and captain from afar.
"He's obviously the type and calibre of player we need if we are going to progress and compete at the top level.
"Chelsea have come out very strongly, in no uncertain terms, saying that he's not available, so we have to reflect that position because John is very much a Chelsea player.
"But we need to address the defensive strength of our side and we'll look at all options."
Hughes' latest public outpouring of admiration for Terry is unlikely to go down well at Stamford Bridge, with a report int the People suggesting the Londoners were ready to lodge an official complaint with the Premier League for alleged 'tapping up'.
Under Section K of the Premier League Handbook, club officials are not permitted to express interest in a player unless they have been given written consent by their current employers to open negotiations.
If that has not been forthcoming, the player's current club could claim an indirect – and illegal – approach.
If Chelsea choose to go down that route, however, they would need to submit an official complaint, supported by a dossier of evidence, to the Premier League, and they have not yet taken that course of action.
For his part, Hughes – who also confirmed his interest in Everton centre-back Joleon Lescott – claimed City would back off if Chelsea continue to rebuff their approaches.
"If we come to a point where we feel there's no chance of a transfer progressing then we move away from that," he said. "We have other options and there may come a point where we concede – but I don't think we're at that point as yet."
A spokesman for the Premier League said that no official complaint from Chelsea had been made.
Hughes also revealed that plans to fly Micah Richards out to South Africa to join City's pre-season tour had been scrapped, with the defender instead remaining in Manchester to continue his recovery from swine flu.