Sven-Goran Eriksson

Sven Goran Eriksson is confident Richard Dunne will agree a new deal and not quit Manchester City at the end of the season.

City skipper Dunne, 28, is keen to negotiate new terms after being overtaken in the club’s pay structure and has yet to agree an extension to his contract, which expires in summer 2009.

Contract talks opened in January but were put on hold as Eriksson tried to strengthen his squad during the transfer window.

If no deal is struck by the summer, the Irishman will be free to invoke the FIFA ruling that allows players aged 28 and over to buy out the final 12 months of their contract and become a free agent.

That would cost Dunne around £1.5m but the Celtic and Newcastle target would recover that cash by agreeing a lucrative move away from Eastlands.

Eriksson said: “It is still in the pipeline and I am sure he will sign a new contract.”