Midfielder takes £15,000 a week pay cut to join LiverpoolEngland international will join on 1 July when contract expiresBurnley striker Danny Ings next possible transfer

James Milner has agreed personal terms with Liverpool and will join Brendan Rodgers’ side on a free transfer when his contract expires at Manchester City at the end of the month.

The 29-year-old has been a target of the Liverpool manager since last summer, when he refused City’s offer of a contract extension worth up to £165,000 a week. He has agreed in principle to move to Merseyside despite Manuel Pellegrini’s desire to keep him and interest from Arsenal. Milner will officially become a Liverpool player on 1 July.

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In a statement, Liverpool confirmed: “Liverpool Football Club are delighted to announce they have agreed a deal to sign Manchester City’s James Milner, subject to a medical. The Reds have agreed personal terms with the England international, who will join the club on a free transfer on 1 July after his contract at the Etihad Stadium has expired.”

Milner’s contract at Anfield is believed to be less than he would have earned had he stayed with City, around £150,000 a week, but the lure of a more regular role with Liverpool – and in his preferred central midfield position – was a key factor in his decision. Remaining in the north-west where the England international is settled with his family was also an influence.

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The signing represents an important early step in Rodgers’ summer rebuilding with the Liverpool manager, given the green light to continue his reign into a fourth season this week by Fenway Sports Group, the club’s owner, wanting more experience and established Premier League players in his side.

Steven Gerrard’s departure for LA Galaxy requires addressing in midfield and Liverpool are also closing in on the Burnley striker Danny Ings, who is also out of contract but will cost a compensation fee of around £5m-£6m given he is under 24.

Milner had grown frustrated with what he perceived as a peripheral role at City, although Pellegrini handed the England international more starts in the Premier League and Champions League last season than during the 2013-14 campaign.