Edin Dzeko struck in the second half of a nervy encounter at the Etihad Stadium on Saturday as City maintained their 100 percent home record after finally breaking down a resolute and enterprising Palace side.

With City also still in contention in the Champions League, the League Cup and the FA Cup, Pellegrini says that they are exactly where he had hoped they would be at the turn of the year.

"We know we are in the position we wanted to be at the beginning of the first half (of the season)," he said.

"We are playing in all competitions. In the Capital One (League) Cup we are in the semi-final, we qualified in the Champions League and we are at the top of the Premier League.

"Maybe eight games ago, nobody believed we could discount six points to Arsenal. We did it. We won the last seven games and we drew one. We must continue this way but we are just in the first half of the Premier League.

"The second half will be exactly the same as the first one, with five or six teams fighting for the title to the end."

Dzeko turned in Jesus Navas's cut-back in the 66th minute to secure the three points that sent City top, but Joe Hart's performance in goal was also a crucial factor.

Hart pulled off three fine saves in the second half to deny Jason Puncheon, Mile Jedinak and Joel Ward.

The England international only returned to City's starting line-up for league games in December having being dropped by Pellegrini after a string of poor performances, but he now looks back to his best.

"I think he always knew what we think about him," said Pellegrini.

"He needed a rest. He worked always very hard but he was always confident he would return to his position. He is playing at his normal performance (level) as the good goalkeeper he is."

Hart suffered a nasty cut below his eye when denying Cameron Jerome in the first half, which led to the Palace forward going off with an ankle injury and left the City goalkeeper needing lengthy treatment.

Pellegrini said that Hart's facial injury was "not serious", but City later revealed that he had required six stitches.

The City manager also bemoaned Palace's defensive approach that made it difficult for his side, which showed six changes from the 2-1 Boxing Day win over Liverpool.

But Palace manager Tony Pulis was not impressed by the claims, pointing to the fact that City themselves announced their own goalkeeper as man of the match.

"Was that the team that cost �350 million ($577 million, 420 million euros)?" he said. "I don't talk about other teams. Didn't they give Joe Hart man of the match?"

Pulis's side remain out of the relegation zone owing to Fulham's heavy 6-0 defeat at Hull City and the manager, who replaced Ian Holloway in November, is eyeing up a few January additions to help their bid to avoid the drop.

"What we need is to turn the 1-0 defeats into victories," the former Stoke City manager said.

"It was important we tried to get up within a certain number of points of the rest of the group at the bottom of the table and it gives us a chance, and that is all you can ask for.

"If we can bring a few players in and strengthen it up a little bit, we can give it a good blast when the year turns round."