City move five points clear at the top of the Premier League table, with second-placed Manchester United facing Tottenham Hotspur, who sit third, on Sunday.
Roberto Mancini's team were a long way from their best but their win was never in doubt after Gael Clichy's drive flew in off Steinsson mid-way through the first half.
They had to wait another 46 minutes to double their advantage when Balotelli, who was left out of the Italy squad for the mid-week friendly with the United States, slammed in from close range.
Mancini's side now entertain Chelsea and head to Arsenal in the next run of seven games before they host United, who have a simple run after Sunday's game at Spurs.
City may have won each of their 13 home league games this season but Bolton at least became only the third team to leave Eastlands without conceding at least three goals.
Although Bolton lined up with American defender Tim Ream as a holding midfielder in a system aimed at containment, City wasted no time in cutting their visitors apart.
With just a minute gone, some quick passes created space for Adam Johnson to send Pablo Zabaleta through and the defender's low cross saw Samir Nasri kept out by a fine block from David Wheater.
Moments later, Yaya Toure fed Balotelli, whose effort come back off the post, before Nasri was twice denied by Bolton goalkeeper Adam Bogdan.
Vincent Kompany almost had an anxious moment at the other end when his header from a Mark Davies free-kick nearly found the corner of his own net.
But City, with the likes of Sergio Aguero and David Silva starting on the bench, maintained their intense pressure.
Balotelli wasted another great opportunity when he missed from close range after more fine work from Johnson.
But the breakthrough came mid-way through the first half when Clichy was given plenty of room to hit a shot from 25 yards that glanced off Steinsson and past Bogdan.
David Ngog was denied by Joe Hart as Bolton looked for a quick response and Ryo Miyaichi also troubled the City goalkeeper twice, going closest after robbing Kolo Toure.
But City almost added a second just before the interval when Yaya Toure tore forward and clipped a pass across to Kompany, whose fine pass on the turn found Balotelli, only for the Italian to be denied by Bogdan's save.
City were totally in control and Bogdan did well to rush off his line to block from Balotelli within seconds of the restart.
Gareth Barry also lifted a shot well over the bar from distance as City struggled to maintain their early pace.
Just after the hour, Kolo Toure went close to adding a second when he thumped a drive past the far post after a fine burst down the right wing.
Darren Pratley almost gifted City a two-goal cushion with what would have been a memorable own goal.
The Bolton midfielder closed down Edin Dzeko just outside his own area and saw his interception bounce away off the bar to safety.
Balotelli finally got his goal mid-way through the second half after Johnson's direct run into the area culminated in a neat back-heel to Balotelli, who drilled in at the near post.
Source: AFP
Source: AFP