Liverpool remain prepared to sell Nat Phillips this month.
Rhys Williams' return could pave the way for Phillips' Anfield exit with the 24-year-old attracting interest from a host of clubs.
Williams has been recalled from his loan at Swansea City.
Watford are understood to have already seen a loan offer for Phillips which included an obligation to make the move permanent this summer rejected by Liverpool.
The Reds still expect to sell Nat Phillips who is valued at £15million and Burnley and West Ham have been linked to the centre back, says the Daily Mail.