Manchester City fielded a makeshift side including the likes of Yaya Toure, Phil Foden and Claudio Bravo but Pep Guardiola’s men retained much of their recent excellent form in the first half.
Bernardo Silva put the visitors ahead before the interval when he finished off Ilkay Gundogan’s neat pass after a powerful run from the German.
However, Jamie Vardy slotted home a controversial late penalty to take the teams to extra-time after Kyle Walker was adjudged to have brought down Demerai Gray in the box.
Neither side could find a winner in extra-time and City ran out winners on penalties (4-3) after Vardy’s effort struck a post.
Photo: Danny Welbeck put Arsenal into the semi-finals (Picture: Getty)
Arsenal and Manchester City booked a place in the semi-finals of the League Cup after victories against West Ham United and Leicester City respectively.
Arsene Wenger’s men were handed a home tie against West Ham and the Hammers fielded a weakened team after a 3-0 victory against Stoke on Saturday.
Danny Welbeck put the Gunners ahead when he tapped home a scrappy effort shortly before half-time and they held on against David Moyes’ side, who offered little in attack.
Arsenal last won the League Cup in 1993 and last reached the final in 2011, where they were beaten by Birmingham City.