The midfielder fails to make Roberto Mancini's 23-man squad, as does Wayne Bridge, but defender Kolo Toure returns to the fold after a six-month drugs ban
The former Manchester United man, who made a surprise move to the Etihad Stadium on a free transfer, will miss the group stages of the Champions League although he could still be involved in the competition should City progress to the round of 16.
The 30-year-old will miss the chance to face former employers Bayern Munich, which faces City at the end of the month, as well as clashes against Villarreal and Napoli in Group A.
Kolo Toure, meanwhile, is included in the squad despite spending the last six months on the sidelines after serving a ban, yet there is no room for Wayne Bridge, who remains a City player despite being linked with a number of clubs throughout the transfer window.
Manchester City squad for Champions League:
Goalkeepers: Joe Hart, Costel Pantilimon, Stuart Taylor.
Defenders: Gael Clichy, Joleon Lescott, Nedum Onuoha, Micah Richards, Aleksandar Kolarov, Vincent Kompany, Kolo Toure, Pablo Zabaleta, Stefan Savic.
Midfielders: Gareth Barry, Adam Johnson, James Milner, Nigel De Jong, Samir Nasri, David Silva, Yaya Toure.
Forwards: Sergio Aguero, Edin Dzeko, Carlos Tevez, Mario Balotelli.