By Germany correspondent Hans Matthias

Liverpool have been beaten by Manchester City to the signing of Ilkay Gundogan, according to a German report.

The Merseysiders are in the market for a midfield driving force this summer and have set their sights on the 25-year-old Germany international.

But incoming City manager Pep Guardiola has sanctioned a move for Gundogan and, according to respected Germany publication Bild am Sonntag, the Manchester club have clinched a deal for one of the Bundesliga’s biggest stars.

It is reported that Gundogan has already signed a five-year contract with the Champions League semi-finalists.

It is said that City have not yet settled on a fee with Borussia Dortmund for the player but a £24million transfer has been discussed between the two clubs.

Borussia Dortmund had been holding out for a £34million fee for a player who has just 12 months remaining on his current deal.

It would be a blow to Liverpool boss Jurgen Klopp to lose out on the Germany international, who has been open about the prospect of leaving his current club in the summer window.

Gundogan has told the Bundesliga side he will not be extending his contract, which expires in the summer of 2017.

Klopp, who was Gundogan’s former manager at Dortmund, is a firm admirer of the player and, as reported by Football Insider last month month, had asked to be kept informed about the German’s situation.

The 16-cap international came close last year to joining City’s rivals Manchester United, but the 25-year-old is on the wishlist of new boss Guardiola and reportedly has already agreed terms with the club.

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Gundogan joined Dortmund from Nuremberg for £4million in 2011 and has established himself as one of Europe’s most sought-after midfielders.

He signed a contract extension last summer but it is due to expire in 15 months and the German club are ready to cash in at the end of the season.