The 17-year-old is under contract at St Andrews until 2014, but with the Blues precarious financial situation, it is believed that it wouldn't take much money to convince the club to sell.
Reds boss Kenny Dalglish has been credited with an interest in bringing Redmond to Anfield, and will rival big-spending City as they look to secure his signature.
Roberto Mancini already has a star-studded squad at the Etihad Stadium, and recently revealed that the Citizens must sell players before they can consider signing anybody in January.
Redmond has attracted the attention of both Manchester City and Liverpool after a series of impressive performances for manager Chris Hughton's side, both in the Npower Championship and in the UEFA Europa League.
The talented youngster has been likened to Arsenal starlet Alex Oxlade-Chamberlain, who moved to north London from Southampton last summer for a fee in the region of £12million.
It's unclear at the moment whether Redmond would command a similar sum, but one thing is for certain is that Liverpool and Manchester City have the resources to sign him.