This will see Laing O’Rourke build a further three rows of seats pitchside and take total capacity to more than 55,000.
To mark the event Laing O’Rourke has released a spectacular fly-through video showing the entire construction process for the south stand phase one expansion.
Work began in March to add 6,000 seats to the South Stand and both projects are due to be completed in time for the start of the 2015/16 Barclays Premier League season.
Planning permission has also been granted for a third phase, which could see a further 6,000 seats added taking total capacity of to 61,000.
This would make the Etihad the second largest stadium in the Premier League.
Tom Glick, Chief Commercial Officer, said: “We have always been committed to bringing fans closer to Manchester City, to the players and to the pitch.
“Whether that’s through digital innovation, community work, international tours, or as in this case, physically allowing fans to be right next to the action, it is our top priority.
“We are already looking forward to seeing the expanded stadium in action for the 15/16 season.
Around 160 people will be employed through the project at its peak. The work begins with immediate effect and will continue throughout the 2014/15 season.