Jurgen Klopp’s side have moved for the 25-year-old to strengthen their defensive options, seeing off interest from Scottish giants Celtic.
Liverpool are moving quickly to do the deal and the centre-back will be put through his medical paces on Monday.
The Reds have agreed to pay Preston a fee of £2m for Davies, while there is a sell-on clause included in the deal.
Liverpool will also help North End cover the loss of the defender by loaning Sepp van den Berg to the Deepdale outfit until the end of the season.
Van den Berg, 19, may not be Preston’s only defensive signing though as they are also looking to sign another centre-back before the window slams shut.
Preston discussed a loan deal for Van den Berg before Liverpool made an approach for Davies.
The Dutchman has clocked three senior appearances in Liverpool’s first team.
