The paper claims that negotiations are at an early stage and that a potential deal remains some way off, but Liverpool are looking seriously at taking the youngster on loan.
Their move comes after Arsenal failed in their own bid to sign the 20-year-old on a permanent basis, and that has opened the door for Liverpool to swoop. Previous reports have suggested that Liverpool were set to seal a deal for the Spanish youngster, much to the chagrin of Arsenal who had been holding their own negotiations for some time, but the Echo's claims that talks have only just begun seem to counter that.
Manquillo has only made six appearances for Atletico Madrid in La Liga since emerging from their B team, but is highly though of enough to attract the interest of two Premier League giants. He was part of the UEFA U19 Championships-winning Spain side in 2012, while he has also represented his country at U21 level.
Both Arsenal and Liverpool seem to have vacancies to fill at full-back. Reds boss Brendan Rodgers has tried, unsuccessfully so far, to land Alberto Moreno from Sevilla, and has also been linked with moves for both Ricardo Rodriguez of Wolfsburg and Sporting Lisbon's Marcos Rojo - although both those players would compete for the left-back spot.
Instead it would be Glen Johnson's position at right-back that would be in trouble should Manquillo arrive - although given his age the youngster may have to make do with an understudy role, and then move for a first team spot at Liverpool if his switch is made permanent after the loan deal is up.
Arsenal have only recently added a new right-back to their ranks in the form of Mathieu Debuchy following Bacary Sagna's departure to Manchester City. However it seems as though Arsenal boss Arsene Wenger has severe reservations about Carl Jenkinson's ability to act as a squad player, and so could move him on - potentially to Newcastle - in order to free up room for Manquillo to arrive.
However all his plans could go up in smoke if Liverpool get their way, and having finished above Arsenal last season may hold enough sway to get the deal done before the Gunners can do anything about it.