Coutinho, who was strongly linked with a move to Barcelona throughout the summer, has not represented Liverpool this season due to a back problem, but he did turn out for Brazil during the recent international break.
Images of the attacker in training on Thursday suggested that he would be in Klopp's plans for this weekend's clash at the Etihad, but the Liverpool manager has ruled Coutinho out of contention.
"I had to make a decision, we now have seven games in the next three weeks," Klopp told reporters.
"There will never be time to train and we had this conversation, before he went to Brazil he couldn't train for around about three weeks. So that means now we have to now prepare him for the rest of the season, which is difficult with our fixtures and our schedule.
"So I decided to leave him out for City. We can use this four/five days for real and proper training. We got the numbers from the Brazilian FA around the intensity of training which was all okay. But he played twice for 15/20 minutes.
"He could have played 15/20 minutes for us again in the City game, maybe longer, but I think it makes sense. By the way he agreed completely and it was a good conversation."
Liverpool are believed to have rejected several bids in excess of £100m for Coutinho from Barcelona in the summer transfer window.