Several newspapers claim that 'Pool boss Gerard Houllier will compete with Newcastle and Manchester United, amongst others, for the 23-year-old forward.
Michael Owen has yet to sign a new deal with Liverpool and it appears that Emile Heskey is no longer part of Houllier's plans.
Heskey has been linked with a move to Birmingham City after turning down a mid-season move to Middlesbrough during the January transfer window.
Liverpool chief executive Rick Parry has reportedly already held an informal meeting with Smith's agent.
Birmingham have already had a £5.75m bid turned down, while Carling Cup winners Middlesbrough have also publicly declared an interest.