The former Barcelona boss, who is currently enjoying a year-long sabbatical after leaving the Camp Nou in May, had been lined up by the reigning Premier League champions as a replacement for Roberto Mancini.
Manchester City's new sporting director, Txiki Begiristain - formerly of Barcelona - recently met with the Spaniard to discuss the position at the Etihad Stadium, but the 41-year-old is believed to have told friends it's the Manchester United job that he wants.
Rumours are gathering pace that Ferguson will retire and leave Old Trafford next summer, but even if he changes his mind, Guardiola is prepared to wait, and could even extend his sabbatical should the Red Devils chief decide to stay.
Guardiola could earn double the money at Manchester City, however, he's been won over by the Manchester United project after meeting Ferguson a number of times in New York over the past few months, to discuss plans for the future.
A three-year deal is on the table for Guardiola at Old Trafford, with the option to bring in the two assistants and three new coaches that he requires to help further develop the clubs's youth programme.