Liverpool are on the verge of naming Roy Hodgson as their new manager.

The 62-year-old has been the frontrunner to replace Rafael Benítez as Liverpool manager since the Spaniard accepted a £6m severance pay-off to leave the club earlier this month. The Fulham manager also has admirers within the Football Association and has been touted among the leading candidates to succeed Fabio Capello following England's dismal failure at the World Cup.

Hodgson has long coveted the England manager's job but, despite the possibility of the vacancy arising within a fortnight, he looks set to be confirmed as Liverpool's new manager possibly as early as today.

Negotiations between Anfield officials and the former Internazionale coach have advanced significantly since Hodgson's return from commentary duties in South Africa, to the extent that only the specifics of his Liverpool contract have now to be resolved. Liverpool are happy to meet the £2.5m compensation fee payable to Fulham under the terms of Hodgson's 12-month rolling contract at Craven Cottage.

Liverpool are confident the uncertainty over the club's ownership and the future of their leading players has not diminished Hodgson's desire to remain in club football at Anfield. Liverpool, who have not qualified for next season's Champions League due to a seventh-placed finish in the Premier League last term, had ideally wanted Benítez's successor in place before their players return for pre-season training. The first batch of Liverpool players report back tomorrow, a second group are scheduled to return on Monday and their World Cup contingent will start pre-season training at staggered times throughout July depending on their nation's progress in South Africa. The club's assistant manager, Sammy Lee, will be at the helm in the event of their managerial search being prolonged.

As well as Hodgson, the former Real Madrid and Villarreal coach, Manuel Pellegrini, and Marseille coach Didier Deschamps have all been linked with the Liverpool vacancy. Club legend Kenny Dalglish, who has been involved in the managerial search alongside Liverpool's managing director, Christian Purslow, made it known that he wanted the job in the absence of better qualified candidates. However, the Liverpool board wanted a manager who has been working in the game.

Deschamps, whose presence on the Liverpool short-list was revealed last week by the Marseille president, Jean-Claude Dassier, today signed a one-year extension to his contract with the French champions. "After the season that we have experienced there is still work to do," said Deschamps, who is now under contract at Stade Vélodrome until 2012. "A great club asked me. I am very flattered but if I ask for respect from my players the least I can do is to be comparable in my commitment to the club. I owe it to the OM."

It is unknown whether Liverpool have offered Hodgson a short-term contract given the public declaration from Tom Hicks and George Gillett, the club's deeply unpopular co-owners, to sell the club once their asking price is met.