Manchester City defender Joao Cancelo is in line for a loan move to Bayern Munich before the January transfer window closes.

A deal that also includes an option to buy the full-back at £61.5m (€70m) has been agreed.

Cancelo has had limited game time since returning from the World Cup, with Pep Guardiola changing the shape of his side.

Cancelo started 36 times for City in the Premier League last season, but has had a restricted role at City this term, and has seen Pep Guardiola change the team's shape and formation.

Cancelo's representatives are understood to have brought the interest from Bayern to City and, given the emergence of Rico Lewis and the performances of Nathan Ake at full-back, City have been willing to allow Cancelo to move.

The versatile full-back has been a key part of Guardiola's side since joining City from Juventus in a £60m deal in 2019 and has helped the team win two Premier League titles.

However, he appears to have fallen down the pecking order of late and has started just three games since top-level domestic football resumed in December.

With four other senior centre-backs at the club in John Stones, Ruben Dias, Aymeric Laporte and Manuel Akanji, City feel they have plenty of cover. Changes to the shape of the side have also not suited Cancelo's game.

It now remains to be seen whether a deal can be pushed through before in the final day of the transfer window.

European football expert Kevin Hatchard:

"This deal is very Bayern in some ways. They are really good opportunists. They've got the money ready so that when this kind of opportunity comes up, they can move.

"If you look at it, Alphonso Davies is an absolute lock in that left-back position, but do they have a huge amount of cover? They brought in Daley Blind in theory to cover him.

"But on the right side, it is more complicated as they've got Benjamin Pavard, who is not hugely in favour and has talked quite openly about potentially moving on in the summer.

"He didn't start the game at the weekend against Frankfurt - instead they went with Josip Stanisic, who is a 22-year-old, good player but happy to be a back-up.

"Noussair Mazraoui, who was brilliant for Morocco at the World Cup, has this pericarditis issue at the moment so they're keeping an eye on him and when he does come back, I would think they will ease him in gently.

"So to have a player of Cancelo's quality to come in and play that right-back role is a massive upgrade for Bayern at the moment. The structure of the deal is great as it's a loan. Everybody wins."

Sky Sports' Ron Walker:

"Barely half a season since being named in the Premier League team of the season for the second year in a row, Joao Cancelo seems to be on the way out of the Etihad.

"He's not the only player to leave for pastures new after falling out of favour - Raheem Sterling and Leroy Sane have trodden that path before - but it's rarely been so sudden.

"His attacking instinct found him partly culpable for City's leakier defence this season, and they are on course for a drop in clean sheets of about a quarter on 2021/22.

"It's only since the World Cup that he has found himself out of Guardiola's favour, and in that time he has featured in just three of their six league games.

"Cancelo was hauled off at half-time of the 1-0 win at Chelsea but could argue he was played out of position in an advanced right-wing role at Stamford Bridge - and Guardiola's adjusted formation has certainly not helped him regain his place. Nor did another poor performance in the surprise Carabao Cup exit at Southampton.

"Pep and Cancelo's relationship had rocky beginnings when he signed from Juventus in 2019, which both have alluded to since things have improved. But Guardiola did hint at another rift when he mentioned a 'lack of hunger' regarding certain players who have been left out in recent weeks, with Cancelo thought to be one of those in the firing line.

"This sudden development suggests that assumption was accurate, and presents one of the fastest falls from grace at the Etihad in Pep's eight years at the helm.

"Though it answers that question, it raises others. On paper, it certainly leaves City weaker without one of the league's best defenders over the last two years. So is this a vote of confidence from Guardiola in Rico Lewis? And is Nathan Ake's new role here to stay?

"This move has elements of a gamble from City as they play catch-up on league leaders Arsenal without one of the league's best defenders of the last two years. But for a team who won the league playing without a recognised No 9 last season, it's far from their first."

Who will be on the move this winter? The January transfer window closes at 11pm in England and midnight in Scotland on Tuesday January 31, 2023.

Keep up-to-date with all the latest transfer news and rumours in our dedicated Transfer Centre blog on Sky Sports' digital platforms. You can also catch up with the ins, outs and analysis on Sky Sports News.