Manuel Pellegrini yesterday made a last-ditch attempt to save City’s bid to land Spanish whizkid Isco.

But it seems like the Blues’ dream signing has been hijacked by a forceful Real Madrid move, just when it appeared the player was in the bag.

Now City are set to reconsider their options, including a possible renewed bid for Napoli striker Edinson Cavani.

Isco does not play in a position where City are short – they already have David Silva and Samir Nasri, who do a similar job – but he was seen as an upgrade.

With money still to spend, they are pondering a return to their primary target for the summer, a new goalscorer, and if Madrid clinch Isco they are likely to be out of the running for Cavani.

Some reports have suggested City will switch their attentions to Liverpool ace Luis Suarez, but the feeling at City is that he would be more trouble than his undoubted talent is worth, especially as he is banned for the first six games of next season.

Suarez has also made it plain that the main reason he wants to leave Liverpool is to escape the attentions of the British press, which he would not achieve by moving 40 miles down the M62.

Pellegrini officially begins his tenure as City manager today, but he was pressed into action to try to stop Isco signing a five-year deal with La Liga giants Madrid.

City have pursued the player for weeks, and with Pellegrini and football director Txiki Begiristain both reassuring the 21-year-old that he would be a key man with City – and is likely to be second or third fiddle to Mesut Ozil and Luka Modric at the Bernabeu – appeared to hold the aces.

City were confident they were closing in on a £21million deal, but Isco’s brilliant displays at the European Under-21 Championships helped to undermine their good work.

The Malaga playmaker helped Spain to win the trophy with a series of sparkling performances, scoring three goals and being named as player of the tournament.

Until that point Madrid’s interest in him had been lukewarm, but he announced himself as a man for the big occasion, and a genuine talent, and they threw their weight behind landing him.

Madrid courted Isco’s father Paco Alarcon and lawyer Rafael Comino while Isco was in Israel for the tournament, and the player revealed there were two offers on the table, from Madrid and City.

Madrid had not appeared too interested until that point, especially as they remember that four years ago Isco, who is a Barcelona fan, openly expressed his dislike for the all-powerful club from the capital.

In 2009, the teenage prodigy had said: “I would say I’m a bit of an antimadridista. One never knows where your future lies, but it’s a team I’ve never liked.

“I get the impression that Real Madrid are an arrogant club, likewise the players and you don’t get anywhere without humility.”

City had high hopes that Pellegrini,  Begiristain and chief executive Ferran Soriano between them would convince the player City would be a better bet – before leaving Malaga, the new City boss had told him that there would always be a place for him in his team.

Isco himself had hinted that he would go to a club where he would be able to continue to play in the first team, and that appeared unlikely at Madrid, where he would face competition from Cristiano Ronaldo, Angel di Maria, Kaka and Karim Benzema as well as Ozil and Modric.

City’s faith that they would pull off the signing was shaken for the first time at the weekend, when it became apparent that Madrid had begun a major charm offensive.

Spanish journalists close to the club were tipped off that Madrid were sure they had agreed a deal worth £20million or £24million depending on which club source you believe.

They were also sure that they had the agreement of the player himself, but City were still trying to prise him out of their grasp last night.

Pellegrini begins work officially today, and he will be sifting through his squad and advising Begiristain of his wants and needs.

High on his “to do” list is working out the future of Carlos Tevez who has one year left on his contract. He is wanted by Juventus and AC Milan, and his adviser Kia Joorabchian is working to try to find a club for the striker.

There has been talk of a £10million bid from Milan if they can shift Robinho to Santos, but so far there has been nothing concrete. Unless an offer is worthwhile, City are pondering the offer of a short-term contract extension to the player.

Pellegrini will also determine whether Gareth Barry should be allowed to leave, with Aston Villa interested in taking the midfielder back. He has one year left on his current deal, and the club has considered a one-year extension, but Pellegrini will have the final say.