Levi Colwill is set to sign a six-year contract with Chelsea.
Liverpool had been long-time admirers of Colwill and had expressed interest in recruiting the centre-back, with Anfield Watch reporting earlier this summer that talks between Liverpool and the player's representatives had taken place.
Seemingly a perfect fit for Liverpool's new 3-box-3 system, Colwill was even being discussed by Reds chiefs as the potential long-term successor to recently appointed captain Virgil van Dijk.
The defender, who played a pivotal role in the England Under-21s' triumphant Euros campaign, had publicly made clear his desire for regular first-team football ahead of the coming season, giving hope to a Liverpool move despite Chelsea's stance that the young star was not for sale.
However, following the long-term injury of Wesley Fofana, Colwill now appears a front-runner to start for the Blues at the back this season, and The Athletic's David Ornstein reports that the 20-year-old has agreed a new six-year deal at Stamford Bridge.
Speaking earlier in pre-season, new Chelsea boss Mauricio Pochettino was effusive in his praise for the player who spent last season on loan at Brighton.
He said: “I am so happy, he can be one of the greatest centre-backs in England.”
The news effectively ends Liverpool's chances of landing Colwill, whose previous deal was due to expire in 2025.
Whether Liverpool sign a defender at all this summer is up for debate, with recent reports claiming that the club are prepared to wait for the right player rather than simply sign a short-term fix.
Other than Colwill, the Reds have been linked with a host of defenders, including Torino's Perr Schuurs, Wolfsburg's Mickey van de Ven, and Sporting CP's Goncalo Inacio.
It is understood that the club are seeking a younger, left-footed player who is able to play in a back three or four.