Liverpool have been dealt a blow in the race to sign Atletico Madrid striker Diego Forlan.

The Uruguayan international is expected to leave the Vicente Calderón Stadium, potentially in the January transfer window, and Liverpool boss Roy Hodgson was thought to be one of the interested parties in the player.

However, Marca reports that Atletico coach Enrique Sanchez Flores is willing to let the player leave, and additional reports in the Spanish media claim that the 31-year-old has been offered to Real Madrid.

A South American star at the World Cup, Forlan has been monitored by a string of clubs following his exploits in South Africa. Tottenham Hotspur, Juventus and Liverpool were all thought to be monitoring the situation.

Forlan began his career at Independiente before moving to Manchester United for a couple of seasons in 2002. A move to Villarreal rejuvenated the striker's career, and Atletico would pay £18.25 million for the player's services in 2007.

Liverpool are reportedly in the market for a striker this January, with Reds boss Hodgson promised a transfer war chest in the region of £35 million from new owners NESV.

The former Fulham boss is thought to have targeted 'five or six' players as potential additions, and Liverpool have been linked with Mario Gomez, Aleksandr Kerzhakov and Jonathan Reis to name just three attackers as the search for a foil to Fernando Torres continues.

Forlan was thought to be at the top of the Anfield radar, and the latest La Liga developments will come as a blow to Liverpool with just over a month to the opening of the window.

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