The Premier League and Ligue 1 champions received a range of sanctions last month for failing to comply with UEFA's Financial Fair Play rules, including fines, capped wage bills and restrictions to net transfer spending.
Arguably the most potentially damaging FFP punishment handed to both clubs was a reduction of their Champions League squad from 25 to 21 players.
Under UEFA rules, eight members of full-size Champions League squads must be home trained and, had this number been retained in the reduced City and PSG "A" lists, their room for manoeuvre in the transfer market this summer might have been significantly hindered.
However, following pressure from international players union FIFPro, which was concerned about the potential impact of the punishments on its members, City and PSG will only need to select five homegrown players in their streamlined groups.
Speaking at the FIFA Congress in Sao Paulo about the decision, UEFA general secretary Gianni Infantino said: "It came after a request from the players union FIFPro saying, when you take these kind of sanctions and measures, you cannot harm the players and the rights of a player who has a contract for the behaviour of the clubs.
"So we looked at it and it was felt appropriate there for the number to be proportionally reduced as well."
The ruling comes as a particular boost to City, even allowing for the club's largely measured public response to the FFP sanctions.
Filling an eight-homegrown quota within a 21-man squad was beginning to look particularly problematic for manager Manuel Pellegrini, following the departure of Joleon Lescott on a free transfer and the lack of first-team action enjoyed by fellow England internationals Micah Richards and Jack Rodwell under the Chilean.
Gareth Barry and Scott Sinclair are two more Englishmen expected to exit City, having spent last season on loan at Everton and West Brom respectively.
Belgian defender Dedryck Boyata, who qualifies as home trained having progressed through City's youth system, was handed a new two-year contract last month despite playing just six games last term - four of those coming in the club's triumphant Capital One Cup campaign.
Of the other teams to fall foul of FFP last month, Russia duo Anzhi Makhachkala and Rubin Kazan have the same 21-man squad restrictions for UEFA competitions as City and PSG. Their compatriots Zenit St Petersburg must name six homegrown players in a 22-man squad.
Restrictions to squad numbers are not included in FFP sanctions handed to Galatasaray, Bursaspor and Trabzonspor of Turkey and Levski Sofia of Bulgaria.
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