The former Sporting Gijon star - who netted 28 league goals last season - appeared set to become the third mega-money Real Madrid signing in a week following the Bernabeu outfit's bids for Kaka (£56 million) and Cristiano Ronaldo (£80 million).
However, the deal has since stalled, with Premier League big hitters Chelsea, Liverpool and Manchester United all still hopeful of landing the Euro 2008 Golden Boot winner.
But it is believed that Rafael Benitez's side are the only one of the three sides with any realistic chance of bagging the marksman.
According to The Sun - close friends of the forward believe he would only leave his native Spain to play under Benitez, teaming up with fellow countrymen Fernando Torres, Pepe Reina, Albert Riera, Alvaro Arbaloa and Xabi Alonso at Anfield.
The Merseysiders' hopes of landing Villa remain slim, with the English club unlikely to be able to compete with the spending power of la Liga giants Barcelona and Real Madrid, who are thought to be willing to splash out around £35 million on the striker.
Earlier this week, Villa's international strike-partner Torres revealed his hopes of being able to team up with Villa for club as well as country, saying he felt the Valencia forward could be the key to Liverpool finally winning their first Premier League crown.
"Rafa Benitez makes the signings and I'm sure those who come will improve us," Torres said in the Daily Star.
"If it was me I would bring David Villa. But that may not be possible.
"We play well together and link up so well. It's a pleasure to play with him.
"I don't know if we are the best partnership in the world but we are European champions and that is almost the same."
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