The Reds are now waiting to hear from Blackburn as to whether or not they are willing to do business.
Neill is entering the last year of his contract and has made it clear to Rovers that he is highly unlikely to be signing a new deal.
Liverpool boss Rafa Benitez is keen to bolster his defensive options and that fact that Neill can play anywhere across the back four is sure to appeal.
Neill was outstanding during the World Cup finals for Australia, where he operated in central defence - while during his time at Blackburn he has established himself as one of the most competent defenders in The Premiership.
Blackburn are keen to keep Neill, but they are already looking at alternatives with Manchester City's Danny Mills top of their list.
Mills is keen to secure regular first team football and Mark Hughes is keen to offer him the chance of a move to Ewood Park.
The likes of Tottenham and Newcastle are also keen to land Neill, but Liverpool look very much in pole position to secure his signatur