According to the Times, City are keen to honour the contribution Hart made to the club during his time at the Etihad, having made 348 appearances in all competitions as he oversaw the club's rise following their takeover in 2008.
The club made the same gesture for midfielder Yaya Toure this summer after the Ivorian midfielder left the club, and plan to hold an event in Hart's honour when the goalkeeper returns to the Etihad with Burnley in October.
“Joe Hart’s contribution to Manchester City cannot be overstated,” Khaldoon Al Mubarak, the City chairman, said. “His 12 years at the club have seen him produce some remarkable performances and heart-stopping saves that will live in the memory for a long time to come. He will always be welcome at the club.”
Hart won two Premier League titles, one FA Cup and two League Cups with Manchester City, making him among the most decorated players in the club's history.
The 31-year-old goalkeeper has also been capped 75 times by England, representing his country at two European Championships and the 2014 World Cup.
However, Hart's career has fallen on hard times in recent years, with the stopper deemed surplus to requirements shortly after the arrival of Pep Guardiola at the club in 2016 and replaced with Claudio Bravo.
Hart subsequently spent the last two seasons on loan, first at Italian side Torino and then at West Ham in 2017/18.
This fall from grace also led to Hart losing his place in the England national side and missing out on a call-up for this summer's World Cup, with the form of Everton's Jordan Pickford almost certainly meaning Hart will never claim the title of England's number one again.