The Daily Mail says the Argentina midfielder is free to negotiate his future with other clubs from February 1 under the terms of his 'loan' arrangement.
The player, signed from West Ham almost a year ago, is 50 percent owned by businessman Kia Joorabchian's sports investment company MSI and has a £17million buy-out clause in his complicated Anfield contract, which expires at the end of the season.
Rafa Benitez desperately wants to keep the player, who has become a key performer in the holding role. Mascherano wants to stay at the club but at £17m he is not seen as an 'impact signing' by some members of the Liverpool board.
"Javier wants to stay," a friend confirmed from Argentina on Thursday night, "but it is looking less likely every day. Liverpool must make up their minds and decide if they want him. Right now it looks as if he might go - and he is very reluctant to do that.
"He may not be considered as an impact signing by some, but the manager knows the qualities he brings to the team and every team needs his type of player in the modern game. Javier believes it is time for him to settle now. The rest is up to Liverpool."