The 23-year-old enjoyed an impressive campaign at club level last time out, scoring 23 goals and registering 12 assists as the Citizens cruised to the Premier League title.
However, Sterling failed to score for England at the World Cup, despite playing a part in their run to the semi-finals of the tournament.
According to The Mirror, Sterling shelved negotiations over a new contract before Russia 2018 in the hope that his stock would rise as a result of a superb showing on the big stage.
The report claims that a successful World Cup would have forced City to accept Sterling's demands for improved personal terms to his current £170,000-a-week deal or attract interest from a big foreign club.
However, the gamble is reported to have backfired following a mediocre campaign in Russia, and the Citizens are adamant that none of their big names will be allowed to run down their contracts and leave on free transfers.
Sterling has been at Man City since his move to the Etihad Stadium from Liverpool in 2015.