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Published 10:00 5 Jun 2018 BST
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The Telegraph report that the deal is again thought to be valued around £60m, with Leicester again pushing for Patrick Roberts to be sent in the opposite direction.
The Foxes were said to have wanted 21-year-old Roberts as part of the deal in January and are believed to have targeted the young forward once again after regularly scouting him during his loan spell at Celtic.
Although Guardiola is thought to rate the youngster, the report claims he is open to letting him leave if it helps complete a move for Mahrez.
Roberts joined City from Fulham in 2015 and is valued at around £15m.
As well as the signature of Mahrez, the Premier League champions are also believed to be pursuing the signature of Napoli's Jorginho. Napoli are thought to have already rejected an opening bid of £44m from the English champions for the Brazilian-born Italian international.
City appear to have switched their attention to Jorginho from Shakhtar Donetsk's Brazilian international, Fred. Like Joriginho, Fred featured against City in the Champions League group stages last season but is now expected to complete a move to Manchester United in the next few days.
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