The Reds are understood to have expressed a strong interest in Milner as the England international remains locked in negotiations over a new deal when his City contract expires at the end of the season.
Liverpool were rebuffed in an effort to sign Milner last summer and are ready to make a move if the opportunity presents itself, especially following the announcement that Steven Gerrard will leave Anfield this summer.
Milner is now officially allowed to speak to foreign clubs about a summer transfer but is believed to have no intention of leaving English football next season.
He is in talks with City over a new four-and-a-half year deal worth roughly €115,000 (£90,000) per week and could use Liverpool’s admiration to force a better offer from the Premier League champions.
The 29-year-old has played a key role for Manuel Pellegrini’s side this season and scored both goals in Sunday’s 2-1 victory over Sheffield Wednesday in the FA Cup third round.
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