Liverpool were beaten by Norwich City to the signing of James Maddison from Coventry City, according to the Mirror.
The Reds had enquired about the 19-year-old midfielder on Monday and were interested in signing him and then loaning him back to the Sky Blues.
But the Anfield club failed in their attempts to secure his signature and decided they would try again in the summer.
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However, Premier League strugglers Norwich City came in with a late £3.5 million bid and managed to capture the highly-sought after player on a three-and-a-half year contract.
Maddison, who had been watched by a vast array of top-flight scouts this season, will return to Coventry on loan for the remainder of the season after signing for Norwich.
Liverpool's transfer window disappointment
It signalled yet another transfer window disappointment for the Reds as they failed in their quest to sign Alex Teixeira from Shakhtar Donetsk as well as reportedly having a bid rejected for Barcelona goalkeeper Marc-Andre ter Stegen.
Meanwhile Norwich boss, Alex Neil, spoke of his delight at landing the hot prospect.
“We’re delighted to sign James as he is a fantastic prospect who has already made a mark at Coventry at such a young age,” the Scot said.
"He has real potential to develop, making this deal one we’re really pleased to get over the line.
"James will return to on loan Coventry for the rest of the season to continue his development before joining up with us on a full-time basis in the summer.”
Maddison made his debut for the League One side as a 17-year-old and expressed his joy at signing for a club like Norwich.
"I've been working hard towards achieving this goal and I'm delighted to be signing for a club the size and stature of Norwich,” he said.
"They are a club moving in the right direction and I'm looking forward to progressing my career there after finishing this season at Coventry."