Real Madrid boss Carlo Ancelotti is reportedly a long term admirer of the England international, who he attempted to bring back to Chelsea from Portsmouth before Johnson signed for Liverpool in 2009.
Johnson has started in four back-to-back wins since returning from an ankle injury for the Reds, and played his part in three Liverpool goals as they ran out 6-3 winners over Cardiff on Saturday.
But with Johnson set to turn 30 in the summer, the Reds have been reluctant to offer him a lucrative new contract, while Brendan Rodgers has also been linked with a move for Southampton full back Luke Shaw.
That means the Reds may be willing to cash in on Johnson with just 12 months to run on his contract, and Ancelotti is reportedly preparing a £5million bid.
If Johnson were to make the switch to the Bernabeu, he would likely replace Alvaro Arbeloa, ironically the man who he replaced when he made the move to Anfield in 2009.
Johnson – who won his 50th England cap in the recent friendly win over Denmark – insists no talks have begun over a new contract at Anfield, and he remains unsure as to whether the club are looking to offer him an extension.