Bennacer was part of the team that lifted the Serie A title last season, making 31 appearances and scoring two goals.
He is an important member of the AC Milan team again this season, and he has started six of their seven Serie A games.
His performances have caught the attention of Liverpool and his contract with the Italian giants expires in the summer of 2024.
Liverpool are willing to offer the Algerian star a salary of €4m in order to convince him to come to Anfield, according to Italian broadcaster Sport Mediaset.
The midfielder currently earns a salary of €1.7m at the San Siro, but AC Milan are hoping to tie him down to a new contract with better terms.
However, AC Milan’s first proposal of a salary of €3m has been rejected by Bennacer, who wants €4m, which Liverpool are ready to pay.
Bennacer has previous experience of the English game as he came up through the academy at Arsenal, though he did not make an appearance in the Premier League.