The 22-year-old wants to focus on helping his side win the Premier League this season and maintaining his red-hot form for the finals in Russia.
However, the delay is likely to put Real Madrid, a team heavily linked with Sterling two years ago, and other European heavyweights on alert, given his impressive start to the season.
The England winger has two years left on his £180,000-a-week contract and was on the verge of leaving the Etihad in the summer amid fears of reduced playing time.
However, his form this campaign has been a revelation and he has helped Pep Guardiola's side open up an eight-point lead at the top of the Premier League table.
City are yet to open contract talks, but will try to start negotiations before next summer with Sterling now established as one of the best players in Europe.