Mooy was a key member of the Huddersfield side that won promotion to the Premier League via the play-offs last season and the Yorkshire club are ready to smash their transfer record ahead of their first campaign in the top flight since 1972.
City signed Mooy from sister club Melbourne City last summer, before loaning him to the Terriers for the 2016-17 campaign.
The 26-year-old was named in the PFA's Championship Team of the Year and a number of clubs have made their interest in the Australian known to City in recent weeks, after it was revealed the Premier League club would be open to offers of around £10m.
Despite that keen interest from elsewhere Huddersfield are confident of retaining his services after agreeing a fee of £8m plus £2m in add-ons.
Should the deal go through it would be worth significantly more than Huddersfield's current record transfer, the £1.8m purchase of centre-back Christopher Schindler, who signed last summer.
It is also believed City have inserted a number of clauses into the deal, including a buy-back option and also sell-on clauses, meaning they will be able to either bring the Australian back to the Etihad Stadium in the coming years, or further profit from his sale if he eventually moves on.
City are looking to recoup tens of millions of pounds in player sales this summer to boost their carefully planned squad overhaul.
First teamers Kelechi Iheanacho, Fernando and Fabian Delph will be let go this summer, while permanent buyers are being sought for Joe Hart, Samir Nasri, Wilfried Bony and Eliaquim Mangala, who spent last season away on loan.
Goal has learned that young midfielder Aleix Garcia is likely to be loaned out.
Pep Guardiola has prioritised full-backs this summer and City hope to wrap up deals for as many as four in the coming weeks, though it is believed they will only move on to their third and fourth options after closing deals for Mendy and Walker.
Southampton's Ryan Bertrand is one viable option for the left-back role, though it is understood early advances for Real Madrid right-back Danilo were knocked back, as the Brazilian is keen to stay at the Santiago Bernabeu.
Talks are said to be progressing positively but slowly for both Mendy and Walker, while City's pursuit of Alexis Sanchez is likely to drag on for many weeks. The Gunners are reluctant to sell to a Premier League rival but, according to sources close to the deal, the Chilean has set his heart on a move to the Etihad.
City sources are hopeful that the forward will stand by those intentions throughout the summer, forcing Arsenal into a sale to City this summer and ruling out a potential move to Bayern Munich, which the Londoners would prefer.