Liverpool legend Phil Thompson believes the signing of James Milner after beating Arsenal for the midfielder's signature is a "massive positive" for the Reds.

The England international agreed a deal to join the Merseyside club after his contract at Manchester City expires on 30 June. He was also on the Gunners' radar, before confirming his move to Anfield.

Brendan Rodgers' side are out of next season's Champions League after finishing sixth in the league table during 2014/15 season. Thompson claims Liverpool's acquisition of Milner is a terrific signing

"It looks as though we've beaten Arsenal to his signature and that's a massive positive for the club," Thompson told Sky Sports.

"I think this deal could have been pretty much done a long time ago, with him being free to speak to clubs from January. He lives up in this area and is happy in this part of the country – he's a Leeds lad – so I think everything was spot on for both parties."

"I love his attitude, I love his ability, and I think it is a terrific signing for Liverpool," he added.

Milner scored five goals and managed seven assists, despite managing only 18 starts in the league for City last term. Thompson is delighted with the midfielder's stats and has backed him to take the central midfield role at Anfield.

The former Reds defender says Milner's ability to create chances will be vital for Liverpool when they compete for the top four spot next season.

"He's got to play in central midfield as much as he can. I was watching Sky Sports News HQ after the news broke and I think I saw he had seven assists last season, whereas Steven Gerrard only had one assist from more games. He'd also created 52 chances – that's exactly what Liverpool want," the Liverpool legend stressed.

The 18-times English champions lost their long serving player Steven Gerrard as the midfielder ended his time at Liverpool after signing for La Galaxy. Milner could replace his compatriot in the central midfield role as he can play either in middle or on the wings.