Liverpool have rejected Manchester City's second bid for Raheem Sterling and warned that they will not accept any offers below their £50m valuation for the winger.
City stepped up their pursuit of Sterling with a proposal worth £40m after add-ons but it has been turned down by Liverpool, though they are expecting a third offer later this month.
The Anfield club are determined to focus on their own squad rebuilding plans, with a £11m bid for Southampton defender Nathaniel Clyne expected in the next 48 hours.
Liverpool manager Brendan Rodgers is also becoming increasingly confident of wrapping up a deal worth a potential £7m for Charlton Athletic defender Joe Gomez before the weekend.
However, the saga surrounding Sterling looks certain to roll on for the rest of the summer, even though sources close to the England international have claimed that City's second bid will be their final offer.
Sterling (20) has emerged as one of Manuel Pellegrini's leading summer transfer targets and the £40m offer would made him the most expensive English player to sign for a Premier League club. Yet Liverpool are continuing a hardline stance on the winger's future despite their failure to secure Champions League football for next season.
Sterling has refused to sign a contract extension at Anfield but still has two years left on his existing deal, with Rodgers insisting that he would not be sold this summer.
Chelsea, Real Madrid, Manchester United and Arsenal have also shown interest in Sterling yet the strict £50m valuation is proving a deterrent.
City could return with another improved offer and there remains a sense that with the transfer window not officially open for another fortnight, the saga still has some way to go. Sources believe that a third bid of £40m plus an additional £5m could even be enough to persuade Liverpool into reluctantly doing business.
Sterling has made no secret of his desire to play at the highest level and said he was not a "money-grabbing 20-year-old" after rejecting a £100,000 a week contract offer towards the end of last season.
The player's agent, Aidy Ward, has also infuriated Liverpool with his conduct over the past 12 months and the club called off talks last month, following an interview in which Ward claimed his client would snub a deal worth £900,000 a week.
Liverpool are turning their attentions towards player recruitment and are closing in on Clyne, after an initial £9m bid for the England international was rejected.
Clyne's future at Southampton appears even more uncertain after Ronald Koeman completed the £3.5m signing of Portuguese right-back Cedric Soares, who also held talks with Stoke City.
Cedric's arrival from Sporting Lisbon will hasten Clyne's exit.
Rodgers is also poised to seal the signing of Charlton's highly rated teenager Gomez, ahead of competition from Arsenal and Aston Villa. Charlton are seeking a fee of around £7m after various instalments.
Gomez, an England U-19 international, is highly rated by Rodgers and suggestions he will be instantly loaned out have been dismissed.
Liverpool will make way for Gomez by sanctioning the sale of Sebastian Coates to Sunderland, following the Uruguayan's loan spell at the Stadium of Light in the second half of last season.
City, meanwhile, have had their hopes of signing Kevin De Bruyne boosted after his contract talks with Wolfsburg stalled. De Bruyne was due to hold talks over a lucrative deal with Wolfsburg this week, but is still waiting to hear from the German club.
The news will alert City that they may not have missed out on signing the £36m-rated De Bruyne just yet, although it remains to be seen whether the £40m bid for Sterling has an impact on their interest in the Belgian.
City, Bayern Munich and Paris St Germain have all shown strong interest in De Bruyne, who was allowed to leave Chelsea for £18m in January last year. Wolfsburg insist they want to keep De Bruyne by offering him a new contract that will include a pay rise and a big buy-out clause, but the 23-year-old has still not received an official offer.
Chelsea have no regrets over letting De Bruyne. It is understood De Bruyne told Jose Mourinho he was not mentally capable of having to compete daily for a place in the match-day squad and needed to play in every game to show his best form.
Mourinho told De Bruyne he would have to fight for his place like the rest of the Chelsea players and that is when the player asked to leave.
Meanwhile, a Spanish judge asked City and Chelsea to reveal how much they offered for Neymar's signature after accepting a lawsuit alleging fraud with regard to the Brazilian's move to Barcelona in 2013.
The Brazilian investment firm DIS, which owned 40pc of Neymar's transfer rights at the time of the deal, has filed a claim against Barcelona, Neymar himself, his father, his former club Santos, the Barcelona president Josep Maria Bartomeu and his predecessor Sandro Rosell.
At the time of Neymar's move, Barcelona claimed they paid €57.1m for the forward, but documents later revealed that included a €40m signing-on fee for the player.
DIS claims that the nature of the deal significantly deflated Neymar's value, and Chelsea and City - along with Bayern Munich - have been asked to declare the extent of their offers to see if Barcelona underpaid.