The move has raised a few eyebrows due to the fact that A-League clubs are not allowed to purchase players directly from other A-League sides.
Caceres’ wage will go into City’s salary cap, but Football Federation Australia does have the right to adjust the figure up or down, depending on the circumstances, where common ownership is involved, under rules introduced to prevent Melbourne City signing Frank Lampard from New York City
Prior to the announcement, City coach John van't Schip said "Manchester City is getting him in. More or less, that's it."
"We can't comment on [a potential loan move] but of course everybody knows he's a good player, he's one of the better players in the A-League. So we'll just have to see."
When asked about his involvement with Manchester City, manager Manuel Pellegrini said "It’s a player that will come here but will probably go on loan to another part, he’s not part of this squad at this moment."
“It’s something the club always do, thinking about the future."
Caceres, 23, arrives at Melbourne City after playing 62 matches with the Mariners.
He will link up with John van’t Schip’s squad this week and will be available for selection ahead of the Club’s Australia Day Eve clash against Wellington Phoenix, next Monday 25 January at AAMI Park.
One of Australia’s emerging talents, Caceres began his career as a member of the Mariners’ Foxtel National Youth League squad, before signing a senior contract with the club in 2012.
He was a member of the Mariners' squad during the club’s Championship winning season in 2012-2013, before enjoying a breakout season during the 2014-2015 campaign, featuring in 26 of the Mariners’ 27 matches on his way to claiming the 2015 Mariners Medal.
Caceres, who signed with Manchester City last Friday from Central Coast Mariners, will wear the number 29 and will commence training with Melbourne City immediately.