This is in line with reports ClaretandHugh has been bringing over the past fortnight after being told that the former Liverpool boss was eyeing the Etihad or Anfield jobs.
Latest reports suggest that City may want the Spaniard as a caretaker boss on the likely firing of Manuel Pellegrini at the end of the season before the club moves for Pep Guardiola next summer.
Benitez had been a provisional candidate for the Hammers until it became clear the talking would start at £6 million a year.
But the major stumbling block was the manager’s desire to take one of the country’s big clubs preferably in the north west close to the family’s Liverpool home.
Benitz’s wife Maria still lives in the Merseyside area and with her husband out of contract this summer, a reunion in the UK is now on the cards.
A source told Claretandhugh this morning: “As we told you several weeks back it was a hopeful thing rather than a truly confident one.
“You never say never but he’s a top manager who will be hunted by a lot of clubs although the north west looks his most likely destination if it can be made to happen.”