The 23-year-old defender joined the Citizens in 2020 from Belgian outfit Mechelen for a fee of around £5.5m but has yet to play a competitive match for Pep Guardiola's side.
Over the last four years, the Burkina Faso international has been sent on loan to Troyes and Marseille, and spent the entire of last season playing for Luton Town before returning to the Etihad Stadium this summer.
Kabore featured in 24 Premier League matches for the Hatters last term, and his performances for them led to considerable interest in his services from several European clubs during the transfer window.
Benfica close to securing loan deal for Kabore
According to Manchester Evening News, Benfica are in advanced talks with City over a deal for the 23-year-old and are expected to gain agreement to take him to the Primeira Liga before the transfer window slams shut on Friday.
The report adds that the agreement will be a season-long loan deal and will not include an obligation for the Portuguese giants to buy him at the end of the term.
Transfer expert Fabrizio Romano added that the Eagles have agreed to cover the player's salary in full until June 2025 to secure the move.
It is understood that with three years left on his current contract at the Etihad, City are in no rush to sell the player and want to afford him the opportunity to play for a club competing in the Champions League as part of his development.
City are said to have a good working relationship with Benfica, having signed Ederson and Ruben Dias from them in recent seasons.
Man City eyeing up last-minute signing?
Manchester City have had a fairly quiet transfer window in terms of new signings, with Savinho being the only player the Premier League champions have spent on this summer, while Ilkay Gundogan returned to the Etihad on a free transfer from cash-strapped Barcelona.
However, Guardiola's side could make one big signing before Friday's transfer deadline, with reports suggesting that the Citizens are eyeing a late move for Brighton & Hove Albion striker Evan Ferguson.
City's recruitment team are believed to have identified the Seagulls' forward as the perfect addition to their attacking options, and a suitable replacement for Julian Alvarez who moved to Atletico Madrid earlier this summer.
Ferguson was on the radar of Mikel Arteta's Arsenal for the majority of the transfer window but the Gunners were unwilling to meet his £70m price tag.
The 19-year-old striker featured in 27 Premier League matches for Brighton last season and scored six goals, while he also made seven appearances in the Europa League.