Liverpool legend Kenny Dalglish has argued that his former club will stay in the top four only if they seriously strengthen in January, explaining that the Reds are now in the best position possible thanks to Manchester United beating Arsenal last weekend.

The side have been on a limited budget since Dalglish was sacked as manager in 2012, after spending over £100m on talent which has largely now been sold on.

Incoming manager Brendan Rodgers has worked well with the money given to him by Liverpool owners Fenway Sports Group, and signings such as Philippe Coutinho and Daniel Sturridge have proved inspired as the side sit in second place in the Premier League table.

They were buoyed last weekend by Manchester United's win over Arsenal, with the north London side now sitting just two points ahead of the Reds at the top of the table. Dalglish believes that while United are now back in the title race, the side gave Liverpool a helping hand in their big victory.

"It was a big win for United and their new manager David Moyes because it put them right back in the frame as title contenders," he said. "By stopping Arsenal, it also brought a lot of teams into contention again when they must have feared they were slipping out of the race.

"But I thought the teams that fared best were Southampton and Liverpool.They look fresh and eager and I think they are both being helped by the fact they don't have to worry about European football this season."

Dalglish also argued that Liverpool, along with fellow surprise outfit Southampon, need to bolster their squads in January to maintain their positions in the top four.

"It has got to the stage now where, if they buy in January, I think both might have a real chance of staying up there," he wrote in his column for the Daily Mirror. "We know that the top teams will all strengthen. Manchester United, Arsenal, Chelsea and Manchester City will all buy in the next window.

"So, if they can - if finances allow it - then Liverpool and Southampton need to do the same.

"If they do that, the rewards could be considerable. They have got themselves in position. Now they have to try to seize their opportunity."

Dalglish then went on to rubbish continued reports that Luis Suarez might be on his way out of Liverpool in January. The striker was signed by the former Red in winter 2011 and Dalglish believes that the club are aware of just how important he is, despite his expressed desire to leave in the last transfer window.

"There will be speculation about Luis Suarez leaving the Reds," he explained. "There always is. But I don't think he's going anywhere.

"He's thriving in this Liverpool team and everyone at Anfield knows he is crucial to maintaining a challenge."