Liverpool have stepped up their interest in Liverpool midfielder Asier Illarramendi and are winning the race to sign the midfielder, according to the Sunday People.

Illarramendi, who was signed by Madrid from Real Sociedad in 2012 has failed to get into the first team and is up for sale in the upcoming window. The Reds, who are looking for a replacement for Steven Gerrard, have earmarked the 25-year-old as the perfect candidate to take over the reins from their departing hero and stamp his authority in the midfield.

Arsenal are also believed to be interested, but Brendan Rodgers is pushing hard to get the deal done before Arsene Wenger loosens his purse strings, as was the case with Alexis Sanchez's transfer last season.

The Gunners have to actively take this case if they have to beat Liverpool to his signature, but their chances may be diminished by their inability to give him as much game-time as opposed to what Liverpool can afford.

The Gunners have a plethora of midfielders who can play centrally, including the likes of Francis Coquelin, Aaron Ramsey and Jack Wilshere, with Santi Cazorla also excelling in a deep role.

The same dilemma is set to cost Arsenal a deal for James Milner, who wants to play in his preferred position in central midfield and has given the thumbs up to Liverpool to complete a deal from Manchester City on a free transfer in the summer.

The Reds have failed to qualify for the Champions League this season, which would limit their finances and force Rodgers to make some wise decisions on his plans for the summer. Their transfer activity from last season was a massive reason behind their failure to live up to expectations, with the likes of Mario Balotelli and Lazar Markovic flattering to deceive.

They cannot afford a repeat of last summer and need to look at better value propositions who can add quality to their squad, yet not disrupt their budget.