The three-year extension follows City bringing in England midfielder Kalvin Phillips into the centre of midfield to replace veteran Fernandinho who left the club.

The 26-year-old Rodri joined City in 2019 from Atletico Madrid in a deal worth around STG50 million pounds ($A74 million) and has won two Premier League titles.

"We have been very successful since I came here, which is something that makes me very proud. But to be honest, that success has made me even more hungry. Once you start winning big titles, you don't want to stop," he told the club's website.

"City, I feel, offers me the best chance of winning trophies and that's why I am so pleased to be staying here for longer," he added.

City's Director of Football Txiki Begiristain said he was delighted to have signed off on the deal.

"He is the perfect example of what a top professional should be: he has a fantastic attitude, lives his life in the right way, takes care of his body and trains hard every single day. That is a manager's dream, and I know Pep loves working with him," he said.

"He has improved a lot since coming here and, for me, he is now one of the best in the world in his position."

Australian Associated Press