Alonso’s departure from Anfield was seen as the main reason for club’s huge downfall and the Reds never gave up hoping the Spain international would return to Liverpool at one point in the future.
The opportunity to snatch the highly rated midfielder may come earlier than expected, given the player’s current contract at Santaigo Bernabeu expires in June 2014.
Alonso, 31, has turned down the offer of a two-year extension and Real Madrid could decide to cash in on their star player if he doesn’t change his mind by next summer.
Liverpool are closely monitoring the situation, and are ready to pounce if the player opts for Santiago Bernabeu exit.
During his spell at Anfield, Alonso has scored 15 goals in 141 Premier League games, winning the Champions League, UEFA Super Cup, FA Cup and League Cup with the Reds.