The former Valencia star had admitted he was set to sign a new five-year deal worth £52 million to extend his stay at City. However, Real Madrid are ready to splash the cash with a £35 million bid for the Spanish playmaker.
Los Blancos boss Jose Mourinho feels Silva isn't committed to Manchester City.
After leading Real Madrid to a La Liga title in three years, the former Chelsea, Real Madrid and Inter Milan is eyeing to become the first manager to win the Champions League with three different clubs. But Mourinho believes Silva can add the extra spark to help Madrid clinch a record 10th European title at Wembley next May.
"Jose has convinced the club that Silva is the man they need to bring "the 10th," a Real Madrid was quoted as saying in Mirror.co.uk.
"More importantly, he now believes that David has changed his mind and decided he will not renew his contract at City. That is why the bid will go in."
The Spanish star denied any link of a possible move to Real Madrid, but Mourinho has insisted that the 26-year-old midfielder cum attacker is the right man for Madrid, who also urged the Bernebeu bosses to back his decision and sign Silva.
Meanwhile, Tottenham Hotspur's wanted midfielder Luka Modric had reportedly agreed terms with Real Madrid, but now that seems to be second choice for Mourinho after trying to lure City for Silva. Spurs chairman had rejected any move for the Croatian star to rival clubs back in England.
Madrid will look to offload former World Player Kaka, who had signed for a record £55m in 2009, to his former club AC Milan for a fee worth £25m. The Brazilian midfielder has had a torrid time at the Bernebeu, struggling for fitness, form and playing time.