Iheanacho, 19, struck twice within 10 second-half minutes, adding to goals by Fernando and Sergio Aguero, to lift City, who host Madrid in the first leg of their last-four tie on Tuesday, back above Arsenal to third place.

Elsewhere, Rafael Benitez’s Newcastle United came from 2-0 down to draw 2-2 at his former club Liverpool – whose French centre-back Mamadou Sakho has failed a drugs test – to inch to within a point of safety.

“A big team must always be focused on both competitions – Premier League and Champions League,” said City manager Manuel Pellegrini. “Every big team must do it every year.

“Kelechi Iheanacho is an important young player with a lot of future. He scores lots of goals, but he is not just a penalty-box player. I am sure that his role in this team will be very important.”

With an eye on Madrid’s visit, Pellegrini kept Belgian playmaker Kevin De Bruyne on the bench at the Etihad Stadium and rested captain Vincent Kompany altogether.

Fernando broke the deadlock with a header from Jesus Navas’s 35th-minute corner and top scorer Aguero added a second from the penalty spot after Ryan Shawcross had fouled Iheanacho.

Pablo Zabaleta teed up Iheanacho to slot in City’s third goal in the 64th minute and the Nigeria international sealed the win by gathering Wilfried Bony’s pass and rounding substitute goalkeeper Jakob Haugaard to score.

City move back above Arsenal, who visit struggling Sunderland on Sunday, while Mark Hughes’s Stoke, who have conceded four goals in three successive games, slip to 10th.

With Sakho watching from the stands after the revelation that he is being investigated by European governing body Uefa over a doping violation – reported to concern a weight-loss drug – Liverpool were pegged back by Benitez’s Newcastle at Anfield.

“I’m really pleased because of the passion and fight they showed. A draw is fine for us at the moment,” Benitez said.

“It’s a bigger step because we can keep believing. Every game now for us is massive. I have the Geordies and the Scousers on my side.”

Daniel Sturridge chested down a high ball and swivelled to fire Jurgen Klopp’s side in front inside two minutes, with his England colleague Adam Lallana bending in Liverpool’s second goal on the half-hour.

But Papiss Cisse brought the visitors back into the game with a 48th-minute header before Jack Colback drove in a deflected 66th-minute leveller to take Newcastle to within a point of fourth-bottom Norwich City and prevent seventh-place Liverpool closing on the European berths.

“It’s not our best day,” Klopp said. “Usually we should win a game in this situation but have to accept it.

“It was an intensive game. Nobody understands why Newcastle are in the relegation zone.”

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