City fell to a 3-1 defeat in Sunday's (AEST) quarter-final in Lisbon, with Moussa Dembele striking twice after Kevin De Bruyne had cancelled out Maxwel Cornet's opener.

There will be much scrutiny of the tactical choices made by Guardiola, who opted to line up with an unfamiliar three-man defence with wing-backs, while Phil Foden and Bernardo Silva were unused substitutes despite the need for goals.

When asked about his line-up, Guardiola said: "No, what we have done is try to cover our weak points in comparing with the strong points, like they make incredible [moves] in the channels with the two-v-two.

"[After the] first 15 to 20 minutes of the first half, it was magnificent, we unblocked our respect a little bit, or we struggled to find our spaces to attack and in the same shape we played well in the final 10 to 15 minutes. 

"We created chances, scored a magnificent goal, but unfortunately missed another one."

The match was defined by a scarcely believable period in which Sterling blazed over the crossbar with the goal wide open before Dembele pounced on a poor parry from Ederson at the other end to make it 3-1 and all but end City's hopes.

Guardiola accepted that to progress in the UEFA Champions League such errors cannot occur.

"In this situation, you have to equalise and go to extra-time in the last minutes, and after, we concede the third goal," he added.

"In this competition, you have to be perfect. We created more chances, more shooting, but unfortunately we are out again."

It marks the third straight season City has fallen at the quarter-final stage under Guardiola, who remains convinced his side will eventually end that hoodoo.

"One day we will break this gap to the semis. In the first 20, 25 minutes, we struggled to find spaces to attack," he said.

"The second half was okay - we were there. I had a feeling we were better. You have to be perfect in this competition."

Lyon's second goal was not without controversy with the VAR (video assistant referee) checking for a potential foul on Aymeric Laporte, while City also appealed in vain for offside against Karl Toko Ekambi, who let the ball pass through his legs to the onside Dembele.

But Guardiola was not in the mood to find excuses for his team's failure.

"I don't know. I don't want to talk about the circumstances sometimes, you know I don't wanna talk, it looks like i am complaining or finding excuses, we are out," he reasoned. 

"I had the feeling we were incredible already. We did a lot of good things, but we made a lot of mistakes in the boxes in the key moments."