Pellegrini believes Milner will sign new deal at Manchester City
Manchester City manager Manuel Pellegrini is confident England midfielder James Milner will sign a new contract in the near future.
Pellegrini and Milner recently gave the impression a deal was close but reports this week claimed talks between the parties had stalled.
Pellegrini admits discussions are still ongoing but expects a positive outcome.
Asked if he expected Milner to stay, Pellegrini said at a press conference: "I think so. There are some differences that can be arranged.
"We are talking with James. It is not easy for all the players to sign a new contract. There are a lot of things to talk, to decide, discuss. I hope finally James will sign his contract.
"I repeat - the same as with Joe Hart - he wants to stay and the club wants to keep him."
Milner, 28, is in the final season of his current deal and would be free to talk to other clubs from next month.
His future became the subject of speculation due to his limited action last season but his prominent role this term - featuring in all but two matches - has changed the picture.
Pellegrini also revealed a fortnight ago that a new contract with goalkeeper Hart was imminent.
There has been no official news since but the Chilean insists there are no issues.
He said: "I hope that is all finished. I am not 100 per cent sure but maybe in the next couple of days you will have the news from the club."
The other major contract speculation at the Etihad Stadium concerns Frank Lampard's loan from sister club New York City, which is due to expire at the end of the month.
Pellegrini hopes to keep the influential 36-year-old until the end of the season and also claimed last week that Lampard wanted to stay longer.
It might be that Pellegrini has to settle for a shorter arrangement - for an extra month or two - but no decisions have yet been made.
Pellegrini said: "It is not just our decision. If you ask me if I want Frank to stay, of course I want him to stay.
"He is a very important player for our squad and he is playing very well, as the top player he is. Maybe in the next days we will be sure but I cannot be 100 per cent at this moment."
Pellegrini's most immediate concern is overcoming the absence of his captain Vincent Kompany and all three of his frontline strikers for the visit of Crystal Palace in the Barclays Premier League on Saturday.
Kompany suffered a recurrence of a hamstring injury in his comeback match at Leicester last week while forward Edin Dzeko hurt his calf in the warm-up. Frontmen Sergio Aguero and Stevan Jovetic were already sidelined.
The lack of forward options could mean another opportunity for 18-year-old Jose Angel Pozo or a change of system to utilise a midfielder such as Milner, David Silva or Samir Nasri in an advanced position.
Pellegrini said: "The strikers, the three of them are out for tomorrow. We will try to play in another way.
"I hope that midfielders will arrive from the second line and we will score in another way.
"I know that we play against a team that defend very well also so we will see what is the best solution to play without them."
Victory for City by four goals or more would take the defending champions back to the top of the table ahead of current leaders Chelsea's trip to Stoke on Monday.
Pellegrini said: "That is very important - not for the pressure we can put on Chelsea but it is very important to add three more points and to finish the first round of games with the most amount of points we can.
"We cannot drop any more points here at home because we already dropped the same number of points we did last season."
But Pellegrini is not taking anything for granted, remembering a difficult home clash with Palace at the same time last year.
He said: "It was a very tough game. It was just after Boxing Day. We won 1-0 and Edin Dzeko scored. I am sure tomorrow we will have a similar game that we had last year."