English newspapers are reporting that Kenny Dalglish will return to Liverpool as a member of manager Rafa Benitez's backroom staff,.
Dalglish, 58, who is widely regarded as the club's greatest-ever player, will have an advisory function with an emphasis on developing young players.
The Scot, who managed the club from 1985-1991, would not be involved in coaching the first team. Although the club made no official announcement, a statement is expected before the end of the season.
Dalglish won six League titles with Liverpool, leading them to the FA Cup and League double in 1986 as well as three European Cups.
He was manager of the club when the Hillsborough disaster occurred in 1989 and is still revered by fans, who often refer to him as "King Kenny."