Dunne to sign Man City deal
Hughes told the club's website: "I've spoken to Richard, he's on holiday abroad at the moment but I've had a discussion with him and I've told him my feelings on the situation.
"Obviously I'm very keen for him to remain at the club, and we're working in that direction. It's a little bit difficult because he's away at the moment, but I'm sure that when he's back this will be resolved very quickly.
"We have offered Richard a substantial deal, there may be more negotiations to be done but I am very hopeful that he will continue to be a Manchester City player."