He believes there is no reason why Brendan Rodgers' charges can't return to the pinnacle of European competition.
Dalglish told liverpoolfc.com: "Liverpool are in fourth spot right now and someone has to come and take it off them because they are not going to give it up.
"They are two points better off than the team below them [Everton] and they have a massively better goal difference.
"They have all the big teams apart from United to come to Anfield, and as the team immediately below them found out last week they are pretty awesome at Anfield.
"You have to play one game at a time but they are in a very good position at a good time."
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