But the Chilean knows another season of failure will see him axed, with Etihad bosses desperate to lure Guardiola to the Premier League.
Guardiola has refused to discuss his future at Bayern Munich, where he is on a mission to win the Champions League.
The Spaniard, who is also a target of Chelsea, is set to be offered a lucrative mega-money deal to remain at the German giants that would make him the highest-paid boss in world football.
The prospect of missing out on Guardiola has put City chairman Khaldoon Al-Mubarak on red alert as he prepares a back-up plan for the prospect of having to replace Pellegrini.
Starsport can reveal Al-Mubarak has targeted Ancelotti as the best alternative and will turn to the Italian should the job become available.
It is understood the former Chelsea and Real Madrid boss is aware City are keeping tabs on his situation and is keen.
A source said: “Pellegrini’s job is safe at the moment, but we know how quickly this can all change and if it did then Carlo Ancelotti is one of two men the club want.”
Ancelotti, 56, has been out of work since being sacked by Real in May following a woeful season with the Spanish giants, despite winning a club record 10th European Cup 12 months earlier.
There is nothing to suggest City are planning to sack Pellegrini, who has led his side to the top of the Premier League table and into the knockout stages of the Champions League with two group games to spare.
Daily Star Sports
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