The club has announced that the midfielder has signed a new deal.
According to Dominic King of the Daily Mail, as cited by Anfield Watch's Twitter account, Reds boss Jurgen Klopp was the driving force behind the decision to ensure that Milner was not lost to another Premier League club.
Before the deal was announced, Paul Joyce confirmed that 36-year-old's wages have been 'significantly reduced' in his new contract.
Milner's new deal will keep him at Liverpool until the end of next season.
Anfield Watch Verdict
Speaking on his new deal, Milner said that he is delighted to be staying at the club for another season.
"I’m very pleased to be staying for another season,” he told Liverpoolfc.com. “I have never taken playing for this club for granted and I never will.
“An overriding feeling for me – and a vitally important one in the process – was the belief I can still contribute to the team. The gaffer was clear what he thought and that was a big factor in me extending my contract.
“Ultimately it was a decision I made, with the support of my family, on the basis of the quality of people at the club; teammates first and foremost, along with the manager and coaches.
"Plus the brilliant training ground staff, who are the heartbeat of AXA. From the medical room, sports science, the kit department, nutrition, the canteen and office staff. All people who make the team what it is.
“As long as I can still play my part, that’s not something easy to walk away from.
“Now this is signed, I’m already looking forward to getting back with everyone, refocusing and going again. It’s a brilliant dressing room to be part of.”