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Dunne - who signed for the club from Everton in 2000 and has formed a solid central defensive partnership with teenager Micah Richards this season - is in talks with club officials.

"I think it is ongoing - and I know the club has spoken to his agent and I have spoken to his agent," Eriksson told the club's official website.

"I think it is not far away before he signs a new contract. He is very important for us and always plays very good football. He is very steady."

Former England boss Eriksson added that he thinks the player with the armband is one of the most important at a club - and holds Dunne in high esteem.

"A captain does not need to speak very much," he continued. "It is important that the players look up to him and listen when he speaks and I think Richard Dunne is one of those players.

"When he has something to say no players argue with that: that's leadership.

"A captain is important. If I have any doubts and want to speak to anyone, I normally take the captain and ask his opinion because he speaks for the players.

"As a coach you have a little bit more contact with the captain than the other players.

"If you take Richard Dunne, he sets a good example in the dressing room, the training field and the pitch on matchdays. He always gives everything, even today in training."

City have undergone a renaissance under the Swede since he arrived in the summer and currently sit sixth in the Premier League, a European place.

Jonathan Symcox / Eurosport