Blackpool boss Lee Clark has signed Manchester United midfielder Joe Rothwell on loan until the end of the season.
Newcastle midfielder Moussa Sissoko is happy to stay at the club, despite rumours he is a target for Arsenal.
The 22-year-old Norway Under-21 international, who recently voiced his frustration at a lack of first-team opportunities at the Etihad Stadium, has been linked with a move to Olympiacos this month and has also reportedly been monitored by other Premier League clubs.
Ibrahim joined City in 2007 but made just three first-team appearances, all in 2010, including one off the bench in a Premier League game against Liverpool in February that year.
A statement on City's Twitter account read: "The club can confirm that Abdisalam Ibrahim has been released from his contract. We wish him well for the future."