Manchester City have identified a replacement for Kalvin Phillips but could face competition from Liverpool, according to a fresh report.

England international Phillips is set to join West Ham on loan until the end of the season, having failed to force his way into Pep Guardiola’s plans since completing a £45 million move to City from Leeds 18 months ago.

While Phillips has made 31 appearances in all competitions for the club, he has started just two Premier League games during his time at City. Moreover, the midfielder has only played twice since his substitute appearance against Young Boys on December 7.

And according to South American publication Bolavip, City is keen to replace Phillips with Argentine defensive midfielder Alan Varela.

Varela has emerged as a key player for Portuguese outfit Porto, which has reportedly prompted several clubs to express interest.

Bolavip claims City are among those, while Liverpool have already approached Porto regarding a potential move at the end of the season.

Varela allegedly has a £60 million release clause, though the said fee is unlikely to pose a significant issue for either Premier League side pursuing the player.

Indeed, Liverpool will presumably have money available for a central midfielder, given that the club was willing to bid enormous fees for both Moises Caicedo and Romeo Lavia last summer, only to be usurped by Chelsea.

Alexis Mac Allister and Wataru Endo have taken turns filling in defensive midfield this season, but Klopp is likely to continue his midfield revamp in the summer.

Liverpool have exceeded all expectations this season. After a summer of sweeping change, Klopp has masterminded a Premier League title challenge, guiding the club to the Carabao Cup final and qualifying for the last 16 of the Europa League.

They have made such progress despite facing a succession of injury setbacks, with Joel Matip out for the season with a ruptured anterior cruciate knee ligament, and Andy Robertson (dislocated shoulder), Kostas Tsimikas (broken collarbone), Thiago (hip), Stefan Bajcetic (growing pains), and Ben Doak (knee) also sidelined.