Tottenham had been widely hailed as a potential challenger after drawing level with United in midweek. But a 1-1 draw against relegation-threatened Wolverhampton Wanderers let United move two points clear of third-place Spurs with a 3-0 win over visiting Bolton.
Paul Scholes scored his first goal since ending his short-lived retirement before Danny Welbeck and Michael Carrick struck to leave United trailing City only on goal difference, although City can restore its three-point lead when it plays Wigan on Monday.
Also Saturday, fourth-place Chelsea beat Sunderland 1-0 through Frank Lampard's ninth goal of the season and Liverpool drew 0-0 with visiting Stoke.
Six months after ending a career during which he only played for United, the 37-year-old Scholes returned to action in last weekend's FA Cup win over Manchester City and became the oldest Englishman ever to score a league goal for United in the 45th minute of Saturday's match.
Scholes turned in a cross-shot from Wayne Rooney, who had already had a first-half penalty saved by goalkeeper Adam Bogdan.
"It was a surprise to see him at the far post," United manager Alex Ferguson said of Scholes. "With his age and the fact he has just come back, we were looking for him to control central midfield, which he did.
"But he has the instinct. He always has had."
Welbeck made it 2-0 in the 74th from an assist by Rooney and Carrick completed the scoring with seven minutes remaining with a curling 25-meter (yard) shot.
Tottenham dominated Wolves at White Hart Lane but Steven Fletcher put the visitors ahead from a rebound in the 22nd minute after goalkeeper Brad Friedel had parried Roger Johnson's header from a corner.
Emmanuel Adebayor had a goal disallowed for offside just before halftime before Luka Modric equalized in the 51st with a low 25-meter (yard) shot.
Wolves goalkeeper Wayne Hennessey made a double save as Spurs pressed without success for a winner. Rafael van der Vaart curled a free kick wide, Michael Dawson and Kyle Walker volleyed over the bar and Hennessey got his feet in the way of an 18-meter (yard) shot from substitute Jermain Defoe.
"We all get disappointed when we don't win," Tottenham manager Harry Redknapp said. "But they are not just going to roll over. A point's a point. We're still on a great run.
"I've never said to anybody that we are going to win the league. I know where we are at and if we can get a Champions League position again this season it will be great for us."
City and United each have 48 points, two more than Tottenham.
Chelsea is another six points back in the final Champions League qualifying position after Lampard knocked in a close-range rebound from Fernando Torres' powerful volley against the bar.
It was the third straight match in which the 33-year-old Lampard has scored since a recall by coach Andre Villas-Boas.
Liverpool's failure to beat Stoke means it could be four points behind fifth-place Arsenal if the Gunners win at Swansea on Sunday, when Newcastle could replace Liverpool in sixth place if it beats visiting Queens Park Rangers.
"There was nothing wrong with their effort of determination but on the day we were not good enough to break them down," Liverpool manager Kenny Dalglish said.
Blackburn hoisted itself out of the relegation zone with a 3-1 win over Fulham even though it played 67 minutes with 10 men.
Nigeria striker Ayegbeni Yakubu was given his first red card after nine years in English football but Morten Gamst Pedersen and David Dunn scored a minute before and a minute after halftime to give a composed Blackburn side a comfortable 2-0 lead.
Damien Duff got a goal back for Fulham but substitute Mauro Formica sealed only Rovers' fourth league win of the season in the 79th with a shot from about 12 metres (yards).
While the win could give under-fire Blackburn manager Steve Kean some respite, only 18,003 fans turned up at Ewood Park to watch the game.
Norwich won 2-1 at West Bromwich Albion and Everton drew 1-1 at Aston Villa.
Southampton kept the lead of the second-tier League Championship with a 3-0 win at Nottingham Forest, staying ahead of West Ham on goal difference after the Hammers' 1-0 win at Portsmouth.