There was major VAR controversy after City were awarded a penalty three minutes after Serge Aurier fouled Sergio Aguero.
Referee Mike Dean had waved play on and the game continued until Dean stopped it to award the penalty.
Ilk Gundogan surprisingly stepped up ahead of the Argentinian and had his spot kick saved by Hugo Loris.
With the ball now loose in the box, Sterling attempted to reach it before Lloris and went down, appealing for another penalty.
A second VAR check ensued and no action was taken, with a second spot kick not awarded and Sterling not booked for diving.
Reflecting on the incident at half-time, Souness told Sky Sports that he did not think the England international had dived.
“It was a poor penalty and I think Raheem is going down by the time he gets to the ball,” he claimed.
“I don't think [it's a dive]. He runs that fast and the ball's there to be got. I think he hasn't got his feet where they should be.”
Despite Spurs boss Jose Mourinho appearing to call for Sterling to be booked for diving, VAR could not have advised Dean to show a yellow card.
This is because the referee did not award the penalty, meaning he had not been deceived.
The forward had already been booked for a poor tackle on Dele Alli which many supporters thought should have been a straight red.
VAR, however, thought otherwise and opted not to overturn the original decision.