The England international midfielder had been linked with a move away from the Etihad Stadium, but appears to have changed his mind after being given more first-team action by manager Manuel Pellegrini.
Milner, whose current deal at the Etihad Stadium expires at the end of the season, told The Mirror: "I'd love to stay at City. That's the bottom line. It's a no-brainer for me. I want to be here. I would love to sign a new contract.
"We are talking, but there hasn't been an actual contact offer yet. Obviously I'd like things to be sorted sooner rather than later, but I'm not putting a timescale on it."