The bizarre situation came to light when the former Germany midfielder was unveiled at City’s Carrington training ground by manager Stuart Pearce.
It is the latest twist in a drama which unfolded in the space of 90 minutes yesterday when initially it was stated Hamann was leaving Liverpool for Bolton.
Then the Trotters revealed his stay at the Reebok Stadium would be one of the shortest in history.
Instead of joining Sam Allardyce’s men as initially agreed, the 32-year-old said he would be joining City instead.
Pearce, who spoke to Allardyce before pursuing Hamann, said: “We have agreed compensation with Bolton. I think they will be reasonably happy with that and we have a top-quality player.
“First off I thought Didi (Hamann) would still be a Liverpool player and not available. But then his agent phoned me and my first thought was to make sure everything was clear at Bolton.
“We have to be seen to be whiter than white in a situation like this. That’s why I rang Sam Allardyce and he gave me permission to talk to Didi.
“I am delighted he is here as he brings experience and leadership qualities to the team. He has everything.
“If you get more winners like him in your squad, you are going in the right direction.”
Hamann explained that he made the decision to join Bolton too quickly, just hours after deciding to leave Liverpool. But he pointed out: “I signed for Bolton four or five weeks ago and realised a few days later I had made a mistake.
“I informed the club a few days later I would like to go somewhere else if possible. After a week they told me I was open to speak to other clubs.
“A few clubs were interested in me and Manchester City were one of them.
“I am delighted to be here now.”