The 26-year-old centre-back spent last season on loan at Sheffield United and clocked 21 appearances in the league for the Championship outfit.
He has three years left on his Liverpool contract, but is well down the pecking order of centre-backs under Jurgen Klopp at Anfield.
The Reds have been looking to move him on and Blackburn are the club who are pushing to agree on a deal to sign the defender on loan.
It has been claimed that negotiations are ongoing between the two clubs over a loan agreement for Davies.
Blackburn are prepared to cover 100 per cent of Davies’ wages for next season in order to sign him.
The Championship side are also prepared to pay a loan fee to Liverpool as part of the agreement.
Blackburn’s financial incentives have given them the edge over other Championship clubs who want the defender this summer.
Liverpool are keen to sort out a deal and send Davies out on loan again in the ongoing transfer window.
