In the second round of fixtures since Christmas over the busy festive period, Carlo Ancelotti and Pep Guardiola were set to face off in the dugout, in a match which had potential top four ramifications.
It will now, however, be played at a later date.
"After the latest round of Covid-19 testing, the club returned a number of positive cases, in addition to the four already reported on Christmas Day," a Man City statement read.
"With the security of the bubble compromised, there posed a risk that the virus could spread further amongst the squad, the staff and potentially beyond.
"Based on strong medical advice the Premier League, in consultation with both clubs, have decided to postpone the fixture.
"All positive cases involving players and staff will observe a period of self-isolation in accordance with Premier League and UK Government protocol on quarantine. The first team training ground at City Football Academy will close for an indeterminate period, with the squad and associated bubble undergoing testing before any decision is made for training to resume.
"Everyone at the club wishes all of our colleagues a speedy recovery ahead of their return to work, training and competition."
On Christmas Day, it was announced that Kyle Walker and Gabriel Jesus has tested positive for the virus, along with two members of staff.
At this point it is unknown who else has tested positive in the City camp.