The controversial striker has reportedly given notice on his rented home in Mottram St Andrew, Cheshire, and is flying his belongings home, the tabloid claims.
AC Milan are set to complete a £24 million move for the 22-year-old who left local rivals Internazionale for City in 2010.
It represents a dramatic U-turn for Milan president Silvio Berlusconi, who this week apologised to Balotelli for previously calling the Euro 2012 star "a rotten apple".
Balotelli has dropped to fourth in the pecking order of City strikers behind Sergio Aguero, Carlos Tevez and Edin Dzeko.
Still in Italy, Liverpool have turned their attention to Inter playmaker Philippe Coutinho and hope to pull off an audacious £8m deal, the Daily Telegraph claims/
Brendan Rodgers has become frustrated in his efforts to sign Blackpool's Tom Ince, son of former England star Paul Ince, and is looking at alternative targets.
To QPR, where their efforts to sign France midfielder Yann M'Vila from Rennes have been complicated by interest from Russian side Rubin Kazan, as well as Harry Redknapp's former side Tottenham.
The Times claims both clubs would be able to match QPR's wage offer and can offer the attraction of European football.
Meanwhile, Harry Redknapp is still chasing Porto's Portugal defender Rolando, the Daily Mirror reports.
It is hard to understand why Rolando would want to make the move, and clearly the player agrees - he has already rejected the Rs three times.
And Michael Owen will not be leaving Stoke City during the January transfer window, says manager Tony Pulis.
Owen has been plagued by injuries since joining the Potters, making just five appearances.