The 31-year-old Wales captain will be unveiled at a press conference in Cardiff on Tuesday afternoon.
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A statement on Manchester City's official website read: "Manchester City can confirm that Craig Bellamy has agreed to join Championship club Cardiff City on a season-long loan."
The statement continued: "He will be officially unveiled in south Wales later (on Tuesday) and, subject to Premier League and Football League ratification, will join up with Dave Jones' side in time to make his debut at home to Doncaster Rovers at the weekend."
Bellamy agreed to drop down a division and sign for his home town club after being frozen out at Eastlands by manager Roberto Mancini.
Tottenham, Sunderland and Fulham were linked with Bellamy but City did not want the striker joining one of their Barclays Premier League rivals.
Bellamy was also a target for former club Celtic, but opted to move closer to his family in south Wales. The move represents a major coup for Cardiff, who were beaten in last season's Championship play-off final by Blackpool.
The Welsh club have previously signed ageing frontmen Robbie Fowler and Jimmy-Floyd Hasselbaink but Bellamy was playing some of the best football of his career last term.
Bellamy had talked about giving up football altogether having been told by Mancini he does not figure in his plans this season.
Instead he is set to make the Bluebirds the ninth club of a colourful career which has also taken in Liverpool, Newcastle, Blackburn and West Ham and racked up around £45million in transfer fees.
Source: PA
Source: PA