Mahrez was desperate to leave the King Power Stadium following a late January approach from Man City, who are understood to have made four bids, the last of which was worth around £65m.
However, the Foxes were reportedly demanding a deal worth a total value of £95m and refused to budge on their asking price, forcing Man City to pull out of negotiations.
Mahrez has since been AWOL from training having insisted that Leicester broke promises that they would allow him to leave the club, and earlier this week manager Claude Puel ruled him out of Saturday's match against Man City.
However, the Algerian could now be in line to feature when Leicester take on the club he wanted to join, having reunited with his teammates in training on Friday.
Mahrez has not played for Leicester since January 20, but has eight goals and seven assists in 24 Premier League appearances this season.