Watkins has been impressive for Villa this season, playing his way into the England squad and making is debut earlier this month.
Football Insider says his form has brought him to the attention of Liverpool chiefs.
Liverpool's scouts are scanning the market for a striker who fits into Jürgen Klopp's style of play. And Watkins is considered an option with his speed, his determination and ability to handle a high pace game.
Significantly, Watkins struck a hat-trick against Liverpool when Villa won 7-2 earlier this season.