Liverpool are favourites to land Fernando Gago after Jose Mourinho told the midfielder he is no longer needed at Real Madrid.
The Reds are looking to overhaul their midfield in order to make a challenge on the top four again next season, and have already signed Jordan Henderson for ?16million.
Argentina international Gago, 25, is rated at around ?15m, but Liverpool are weighing up a bid of around ?10m.
The defensive midfielder's agent, Marcelo Lombilla, is reported to have begun talks with Anfield director of football Damien Comolli over a move.
Lombilla said: 'Gago needs to play and Liverpool would be a perfect club for him, Fernando wants to get back on the pitch and return to the top level and at the moment that is not possible in Madrid.'
A source at Madrid told the Daily Star that Gago would leave the Spanish giants this summer and that the Reds were leading the chase for his signature, saying: 'Fernando knows that he has no future at the club.
'There has been interest in the past from some Italian clubs and Aston Villa, but Liverpool have shown the most interest.'
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