The Czech Republic international is currently on loan at Championship side Watford, and the 20-year-old has been extremely impressive - bagging 20 goals in 29 league appearances for the Hornets.
And City, along with defending Serie 'A' champions Juventus, are monitoring the youngster's availability.
Mancini instructed his scouts several weeks ago to keep a watchful eye over the striker, and they're reportedly impressed with his clinical finishing.
The report claims City are keeping their cards close to their chest, and have no intention of moving anytime soon to try and bring the Czech star to the Etihad Stadium.
In contrast, Juventus may bid in the summer as they look to add to their forward options. They signed Nicklas Bendtner on loan from Arsenal last year, but that was thought to be only because they missed out on their top transfer targets. Vydra is due to return to parent club Udinese at the end of the season, and the Italian club are thought to be keen to incorporate Vydra into their first-team plans for next season. This could complicate a move to Juventus.
Reports earlier this month had revealed a number of Premier League clubs were tracking the forward.
Vydra has risen up through the youth ranks for the national team, appearing at every age level from under-16s through to the full senior squad. He now has five caps for his country.
The young forward joined Udinese from Banik Ostrava back in 2010, but he was shipped out on loan to Gianfranco Zola's Watford team this term due to a loan agreement between the Italian and English clubs.