And Kop boss Kenny Dalglish is also closing in on Sunderland midfielder Lee Cattermole.
Downing has two years left on his Villa contract and is refusing to discuss a new one. The England winger, who shares the same agent as Anfield stars Steven Gerrard and Jamie Carragher, said: "I know the club are keen for me to extend my contract.
"But I'm 26 and at a major crossroads in my career. I do want to play in the Champions League at some point so I won't be committing to a new deal at the moment."
Dalglish is also ready to offer £12m for Cattermole, 23, who is believed to have an escape clause in his Sunderland contract.
The Anfield chief hopes to wrap up both deals by the end of next month - and is also close to signing France midfielder Sylvain Marveaux on a free from Rennes.
But striker David Ngog, 22, has been told he can find himself another club - although Liverpool will want £8m for him.
Dalglish is adamant the lack of European football at Anfield next term for the first time in a decade will be no barrier to attracting top stars to Merseyside.
He insisted: "Our history and tradition makes us attractive whether we are or aren't involved in European competition.
"If a player thinks otherwise, we're better off without him."
