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Aston Villa have agreed a four-year deal worth £20million fee, which includes £75,000 a week for Stewart Downing.
Downing has been agitating for a move since the end of last season. But, Villa have turned down bids of £15million and £12m from the Merseyside club for the England international earlier this summer.
During a press conference, Villa chief executive Paul Faulkner said: "I can confirm that we have reached an agreement with Liverpool following an improved offer received earlier today and the submission of a formal transfer request by Stewart Downing, and have subsequently given them permission to speak with the player.
"We believe there are replacements available in the market who can strengthen our squad ahead of the coming season, and we are in discussions as such."