The 18-year-old midfielder is one of the most highly rated youngsters in England, and has been scouted by Liverpool chief scout Barry Hunter for the past six months.
Manchester City and Arsenal have both watched the England under-21 star in action, but it appears Liverpool are the only club willing to match Derby County's valuation.
The report claims Liverpool will send Hughes back to Pride Park on loan for the rest of the season. The youngster, who made his Derby debut aged 16, made 35 Championship appearances for the East Midlands club last term.
Regarded as one of the jewels in the England youth system, the FA hope he'll go on to become a fixture in the under-21 side before making the step up to the national team.
He featured under Roy Hodgson for the under-21s against Scotland earlier this month, and despite being one of the squad's youngest players, he impressed coaches with his technique and maturity.
City and Arsenal were both believed to be interested in Hughes, but Liverpool's willingness to loan him back to Derby coupled with the £10m fee has put Brendan Rodgers in the driving seat.