Ireland, who is currently in the United States as part of City's pre-season tour of North America, has been instructed to find alternative employers by his manager Roberto Mancini.
In order to comply with a new Premier League ruling, Mancini must submit a 25- man squad to Premier League officials before the start of the new season.
The City boss will have to leave out a number of senior players, and Ireland has been told he will be not included on the list.
The midfielder made just 22 Premier League appearances last season, and the signing of Yaya Toure, combined with the anticipated arrival of James Milner, means he has fallen even further down the pecking order this summer.
A host of Premier League clubs have contacted Manchester City to inquire about Ireland's availability, but only Sunderland and Aston Villa have expressed a willingness to make a formal offer.
City's £10m asking price has deterred a number of potential suitors, and while neither Sunderland nor Villa are willing to offer an eight-figure fee, both are hopeful of striking a compromise agreement with the Manchester club.
In Villa's case, that could involve a trade-off that incorporates Ireland into any deal involving Milner, but Martin O'Neill remains reluctant to part company with the former Newcastle midfielder.
As a result, Sunderland boss Steve Bruce is hoping to steal a march by opening formal discussions with City officials when he returns from a pre-season tour of Portugal.
The Black Cats play their final game in Albufeira tonight when they take on Portuguese champions Benfica.
Sunderland's central midfield ranks were reduced when Lorik Cana joined Galatasaray at the start of the month, and with both Lee Cattermole and David Meyler having suffered serious injuries in the second half of last season, Bruce is keen to ensure he has adequate options in the centre of the pitch.
Whether Ireland can be persuaded to move to Wearside, however, remains to be seen, with the 23-year-old having expressed a desire to fight for his place at the City of Manchester Stadium.
It did not go well for me last season, said Ireland.
But my view is that I have not become a bad player overnight.
I have read about supposed interest but I have not heard anything directly. Ideally, I would like to stay here and build a future here. I am not going to rush into anything. I think it is best if I see what happens during the first half of the season.
That decision might be taken out of his hands, though, if Mancini carries through his threat of omitting Ireland from his Premier League plans.
As well as stepping up his pursuit of Ireland, Bruce is also confident of tying up a new loan deal for John Mensah before the end of the week.
Mensah's permanent employers, Lyon, have reluctantly admitted defeat in their attempts to sell the Ghana international, whose chronic injury record has put off a number of potential suitors.
Lyon officials contacted their counterparts on Wearside over the weekend to discuss a similar loan agreement to the one that enabled Mensah to make 17 senior appearances for the Black Cats last season.
Bruce jumped at the chance of re-signing the centre-half, and a deal could be confirmed in time for Mensah to begin training with his former team-mates at the start of next week.
Meanwhile, Kieran Richardson is close to agreeing a contract extension that will remove any uncertainty about his future.
Richardson entered the final year of his current deal at the start of the month, and Bruce is confident an agreement over an extension will be reached soon.
We hope it will get done and we hope we'll be able to announce something shortly, he said. I like him as a player. He has got a bit of versatility and he can play in a number of different positions.