Both Chelsea and Bolton have reportedly agreed a £7milllion transfer fee for the 26-year-old to move to Stamford Bridge.
But the move has hit a snag as personal terms have not been reached between the Blues and the England international, who is believed to be holding out for an improved package.
And according to the Daily Mirror, Reds boss Kenny Dalglish is all but ready to pounce on the opportunity to snap up the highly-rated centre-back.
The Scot is known to be a huge admirer of Cahill - more so because he is English.
Despite Liverpool boasting the best defensive record in the Barclays Premier League this season - having conceded just nine goals so far - Dalglish reckons he could do with another quality signing to further strengthen his defence.
However, it is now down to whether Cahill would agree on personal terms with the Blues.