The 32-year-old midfielder was under the impression that he could leave the club he joined for 37 million pounds five years ago for nothing after being told by the president Florentino Pérez that he was surplus to requirements. However, his hopes of moving to Anfield were frustrated when Real reneged on that agreement and instead insisted that Liverpool, as potential rivals in the Champions League this season, would have to pay a 2 million pound fee for him.

Figo returned to training with Real on Friday while his representatives thrashed out a compromise with the club's hierarchy. Liverpool are confident a conclusion can still be reached by which they will sign him on a free transfer and they have already agreed a wage package for him which will see his weekly salary reduced by almost 30,000 pounds to about 60,000 pounds.

Alongside Figo's imminent arrival, Liverpool ended a traumatic week on a high after agreeing new four-year contracts with Steven Gerrard and Jamie Carragher.

Gerrard's signature on a deal worth 100,000 pounds-a-week was greeted with huge relief at the club after his U-turn over a move to Chelsea. Carragher, who has the same agent as his clubmate in Struan Marshall, has seen his wage increase from 40,000 to nearer 65,000 pounds a week.

"Now we're going to make winning the Premiership title our top priority," said Carragher.

"We know how much it means to everyone here to get the trophy. I don't know how soon we'll be able to do it and it's going to be tough to close the gap but there's no point being defeatist about it. We proved in Europe what we can do on the big occasion and we've got to produce the same on a consistent basis in the league."

The 25-year-old Gerrard said: "Over the last 12 months there has been a lot of speculation and it hasn't helped my football. It's nice to sign a four-year deal to make sure this situation doesn't happen again. Next season you'll see a Steven Gerrard who has got a clear mind. I'll be a better player. I think the speculation has affected me.

"I spoke to the manager and players and apologised to them for all the speculation. I don't think it's been helpful. If we have a fully fit squad this year with Steven Gerrard on top form then we can bring more success to the football club."