Fulham will demand compensation should Liverpool come calling for manager Roy Hodgson.

The Daily Star says if the Reds opt to go for Hodgson they would still have to agree a compensation package with Fulham - and Mohamed Al Fayed would make them pay at least £2m to get their man. Liverpool adviser Kenny Dalglish is working with managing director Christian Purslow in finding a replacement for Rafa Benitez.

Though Sven Goran Eriksson has declared his interest, it is thought he would be too expensive for Liverpool, while Spurs boss Harry Redknapp would be difficult to prise away from White Hart Lane.

Benitez is set to be named Inter Milan coach in the next 48 hours - which will save Liverpool £2 million as part of their compensation agreement.