Manchester City kicked off an ambitious summer of rebuilding by completing a £12m deal for Gareth Barry last night and the club will follow that with an attempt to lure Carlos Tevez from Old Trafford later this week.

Aston Villa accepted a straight cash bid for Barry yesterday morning as City officials, mindful of frustrations in the last transfer window and the ambitions of the billionaire owner, Sheikh Mansour, wasted little time in finalising a fee for the long-time Liverpool target. The 28-year-old, who last summer cited Champions League football as the motivation for exchanging Villa Park for Anfield, held talks with City yesterday afternoon and will fly to Kazakhstan with the England squad this morning having doubled his previous salary to £100,000 a week.

Next in line for City is Tevez, ­provided Kia Joorabchian, the head of the consortium that owns the Argentinian's economic rights, decides to invite rival offers for the striker following his latest round of talks with Manchester United. David Gill, the United chief executive, is scheduled to meet Joorabchian in the next 48 hours in the hope of finally resolving the impasse over Tevez's future at Old ­Trafford. Gill indicated before last week's Champions League final that United are now prepared to pay the £25.5m required to turn the striker's two-year loan spell into a permanent deal, despite ­describing the sum as "a bit toppy" and initially ­hoping to reduce the fee by up to a third. Joleon Lescott may also be a target for Mark Hughes although Everton are likely to rebuff any move for the England defender.

Joorabchian has resisted several offers for Tevez from rival clubs, with Chelsea and Real Madrid believed to be among them, as he allows United the chance to take the option they agreed in 2007. A representative of Tevez, however, has claimed his client has been "humiliated" by United's reluctance to meet the ­original asking price and, if no agreement is reached this week, the way will be clear for City to make an official bid.

Rafael Benítez is also interested in Tevez but cannot compete financially with Chelsea, Real or City, and not even for Barry, who was more of a priority than the Argentinian for the Liverpool manager but has now escaped his pursuit for a second and probably final time.

The England international has signed a five-year contract with City, who met no late competition from Liverpool, following swift negotiations with the executive chairman, Garry Cook, at the national team's base, The Grove near Watford. He was also granted permission by the Football Association to leave training with England and undergo a medical.

"I'm delighted to be joining City," Barry said. "It didn't take much persuasion from Mark Hughes –they are heading in the direction I want to go. There is great potential here, and I'm sure there will be a few more additions to the squad this summer."

Hughes said: "When players of his quality become available then you have to be in the market for them so we are absolutely delighted that we have been able to conclude this deal.

"The experience required to compete with the best in the Premier League is vital. With Gareth we get the experience of someone who has played week-in, week-out in the hardest league in the world. He plays at a level that has an impact on the game and we are thrilled that he is joining us."

Barry's decision to move to City will sit uncomfortably with Villa supporters and Martin O'Neill. The former Brighton trainee indicated 12 months ago that the chance to play Champions League football was the motivation for his desire to join Liverpool. City, however, finished 10th in the Premier League, 12 points behind Villa, and failed to qualify for the Europa League, leaving Barry open to ­accusations that finance rather than football has ­influenced his decision.

Indeed, it is highly possible that O'Neill knew what was around the corner when, in the closing weeks of the season, he repeatedly said that no one at Villa Park would "begrudge" Barry the opportunity to join a Champions League club. Villa offered the club's longest servant – he joined 12 years ago – a new contract worth around £80,000 a week but once City tabled a £12m bid for a player who could leave for nothing this time next year, and it was obvious that Barry's head had been turned, O'Neill advised Randy Lerner, the chairman, to sanction the deal.

City's successful pursuit of Barry is unlikely to come as a major shock to Benítez, although the Liverpool captain, Steven Gerrard, expressed a desire to see his England colleague at Anfield only this week, but it may yet complicate his summer transfer policy. Benítez, thwarted in five attempts to sign Barry last year, remained keen to bring the midfielder to Anfield despite the possible ramifications for Real Madrid's target Xabi Alonso. Benítez has said his compatriot is not for sale, though Alonso could yet force the issue by declaring he wants to end his five-year stay at Liverpool. Athletic Bilbao's central midfielder, Javi Martínez, is a possible alternative to Barry for the Liverpool manager.

Tugay, the former Blackburn midfielder, has said he is joining City's coaching staff. He knows Hughes from Ewood Park and said he would "work as a coach" before becoming "technical director"."I made an agreement with Manchester City and will work as a coach," Tugay told Turkish TV station NTV. "To work there will be a huge step for me. When I feel strong enough, then I will begin to work as a technical director." Tugay retired from playing at the end of this season.