The defender looks likely to leave the Etihad Stadium after rejecting a new five-year contract.
And Brendan Rodgers is preparing a summer swoop for Richards after seeing a loan move for the defender turned down in January.
The Anfield boss is attracted by Richards’ versatility given he can play right-back and central defence.
City will look to recoup around £8m for Richards, despite the fact he only has 12 months left on his current deal.
Manuel Pellegrini is keen to keep hold of the 25-year-old, particularly given he meets the Barclays Premier League homegrown criteria.
But they face the prospect of losing Richards for nothing at the end of next season when his current deal expires.
City are lining up a move for Arsenal contract rebel Bacary Sagna as a replacement for Richards.