Crystal Palace have signed Mamadou Sakho after they finally agreed a fee of £26m with Liverpool for the France defender.

Palace’s bid of an initial £22m plus £3m in add-ons was rejected earlier this week with Liverpool holding out for £30m for the 27-year-old, who spent part of last season on loan at Selhurst Park.

Palace were linked with moves for a number of defenders on deadline day, including Manchester City’s Eliaquim Mangala and Lamine Koné of Sunderland but Sakho, who was restricted to eight Premier League appearances for the club last season by a knee-ligament injury, was always their primary target. He has signed a five-year deal.

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Sakho had been out of favour at Anfield since falling out with Jürgen Klopp at the start of last season when he reported late for a training session during their tour of the United States and was sent back to England. He joined Palace on loan in January and was the catalyst for a run of results that helped Sam Allardyce’s side avoid relegation.

Palace had initially decided against pushing for a permanent signing at the end of last season and instead looked elsewhere, with Calum Chambers of Arsenal and Bruno Martins Indi among the alternatives considered. But after Frank de Boer hinted last week that Liverpool would have to lower their asking price for Sakho, talks between the chairman, Steve Parish, and his Liverpool counterparts eventually reached a breakthrough on Thursday.

Leicester City and West Bromwich Albion had also been interested in the defender, who moved to Anfield for £18m from Paris Saint-Germain in September 2013, but it is understood a return to London was always his favoured option if a deal could be agreed.

The fee is the second-highest in Palace’s history after the £27m signing of Christian Benteke from Liverpool last summer and will placate some sections of the home support after a difficult start to life under De Boer. Palace have lost their first three matches and have yet to score a league goal since the Dutchman succeeded Allardyce.

But Palace were foiled in their attempt to complete the £9m signing of Everton’s Oumar Niasse in their search to provide backup to Benteke. Niasse, who spent the second half of last season on loan at Hull, was also due to have a medical last night but will now remain on Merseyside. The Senegal international moved to Goodison Park in January 2016 but has played 175 minutes in the Premier League after falling out of favour with Ronald Koeman. He scored four times in 17 appearances for Hull last season. Meanwhile, Wales midfielder Jonny Williams joined Sunderland on loan as Palace attempted to trim down the first-team squad.