The English champions are planning to sign a new midfielder following the departure of Fernandinho and it is claimed that Phillips is their top choice.
Talks have been claimed to be progressing, but direct contact between the clubs is only expected to take place soon, as Manchester City look to press the accelerator.
Leeds have just signed a new midfielder in the shape of Marc Roca, from Bayern Munich, but he is not claimed to be seen as a replacement for Phillips.
The Whites would like to keep hold of the England star, but could find it difficult to resist Manchester City’s approaches.
Phillips is also of interest to Paris Saint-Germain; West Ham United also retain an interest.
The French champions are admirers of the England midfielder and have been in touch to ask Leeds how much would be needed to sell him.
And the Leeds star may have to choose between Manchester City and PSG this summer.
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