The Reds are understood to be tracking the impressive 21-year-old Croatian ahead of the looming transfer window as they plot for life after departed captain Steven Gerrard.
Although the Merseysiders have reportedly offered around £15m for the playmaker, such a sum falls short of the £21m the Serie A side wants.
And reports claim that in order to bridge that gap Liverpool have made Balotelli available as a makeweight, however, the Nerazzurri are not interested and have rejected such a deal.
‘Balo’ made his senior breakthrough with Inter, but manager Roberto Mancini would rather have the cash to spend on additions than the chance to work with the player he coached at Manchester City once again.
The 24-year-old only signed for Liverpool from AC Milan last summer, but his debut season yielded just one Premier League goal – albeit a late winner in a 3-2 clash with Spurs.