The Wales international has been on the radars of both clubs in recent weeks, but now it appears that Spurs are likely to get a deal over the line ahead of their Merseyside rivals.
A fee of £8m is set to be agreed between the two clubs, which will then allow to the 21-year-old to settle terms with the north Londoners.
Davies was thought to be edging towards a switch to Anfield to join up with former Swans chief Brendan Rodgers, yet the youngster is understood to have backtracked.
Concerns over his first-team role, with the Reds still chasing Sevilla’s Alberto Moreno, is thought to be the major contributor to the decision, with a starting berth virtually guaranteed at White Hart Lane.
Gareth Bale’s successes with the Lilywhites could also be a factor, with Davies’ international colleague having joined Spurs earlier in his career as a promising left-sided defender.
Liverpool look set to push a move for Moreno, but could elect to pursue Chelsea outcast Ryan Bertrand instead.