The 24-year-old was one of City’s brightest stars to come through the academy in recent years, when he broke into the first team set up as an 18-year-old.
However after years of failing to fulfil his potential through a series of injuries, as well as problems off the field, he has now had his contract paid off by the club.
The public announcement of the news followed last nights emergence on Twitter, of a recent picture of Jonhson looking a shadow of his former self.
Previous City boss Mark Hughes was among many who had tipped the midfielder for stardom in the game whilst in charge of the Manchester club, saying:
“He is an outstanding young player with a great talent and a great future ahead of him and we want that future to be at City, so we are working to that end.
“The guy has everything in front of him.
“We have all been impressed with what he has shown so far, and I am sure he will be an England regular.
Unfortunately for Johnson, this potential never materialised and his last appearance for the club was as a substitute in a Carling Cup tie against Scunthorpe in October 2009.
He also spent an unsuccessful spell on loan at Leicester City last season, which ended prematurely due to injury.