The 33-year-old Ivory Coast midfielder has so far only featured once under new manager Pep Guardiola, and he was expected to leave the club during the summer transfer window.
However, no move away from the Etihad Stadium ever materialised before Wednesday’s deadline, meaning he could be spending most this season in the stands.
Toure was squeezed out of City’s Champions League plans by UEFA rules on the minimum number of locally trained players in European squads.
Although teams can name up to 25 players, eight of those must be homegrown and City’s lack of numbers in this area following Joe Hart’s loan move to Torino meant they could include only 21 – with Toure the odd man out.
City qualified for the group stages after coming through a play-off tie against Steaua Bucharest, where Toure played in the 1-0 second leg win at the Etihad Stadium.
The English side, who reached the semi-finals last season, were drawn in Group C along with Guardiola’s former club Barcelona, German side Borussia Monchengladbach and Scottish champions Celtic, where Toure’s brother Kolo now plays after leaving Liverpool.
Manchester City Champions League squad for 2016/2017 group stages:
Claudio Bravo, Willy Caballero; Bacary Sagna, Vincent Kompany, Pablo Zabaleta, Aleksandar Kolarov, Gael Clichy, John Stones, Nicolas Otamendi; Fernando, Raheem Sterling, Ilkay Gundogan, Jesus Navas, Kevin De Bruyne, Fabian Delph, Leroy Sane, David Silva, Fernandinho; Nolito, Sergio Aguero, Kelechi Iheanacho.