Villa deal for Baros frees Liverpool to pursue Owen return

Anfield officials are in the process of finalising a transfer offer that will tempt Real Madrid to part with Owen without impinging on the finances Benitez has designated for a new central defender and right-sided midfielder. At present, Liverpool cannot meet Madrid's asking price, believed to be in the region of £14m, but as they are still owed almost half of Owen's original £8m transfer fee by the Spanish club, they have more leeway than previously thought.

Liverpool will only move for the 25-year-old once a member of their existing strike force has left the club, and that obstacle should be removed later this week when Baros returns from international duty with the Czech Republic. Though Lyon's manager Gérard Houllier can now revive his interest in Baros armed with £23m from the sale of Michael Essien, having originally balked at Liverpool's £7m asking price, Villa are favourites for his signature following an improved offer of around £6.5m last Friday.

Baros revealed: "Everything leads me to believe there is nothing for it but to say my goodbyes to Liverpool. Villa have increased their offer and we have come to a financial agreement. That doesn't mean the deal is complete, but Villa are a quality club and I don't consider it a backward step at all. My situation will be better there."

Liverpool will reinvest Baros' transfer fee immediately, although not necessarily on Owen, as negotiations with Madrid could drag on towards the end of the transfer window. Steven Gerrard, however, believes Liverpool cannot allow Owen to return to any other Premiership club, with Newcastle also chasing his signature.

"Everyone at the club would love him back," Gerrard said. "Obviously, it's up to Real Madrid, but when I see Michael in the England squad this week I won't even have to ask him where he'd like to be in a few weeks. Could you imagine him coming back to Anfield and scoring against us for another club? It would be a nightmare."