The 18-year-old has been starring for the Dons for some time and is widely considered to be one of the very best players in League One, despite his tender age.
His rampaging displays for the third tier outfit have even led to comparisons with Reds idol Steven Gerrard – who is set to leave Anfield at the end of the season to join LA Galaxy.
Although Liverpool have been linked with Alli, as have Manchester United, Newcastle are now frontrunners for the teenager, with a bid having been lodged.
The offer is thought to be in the region of £9m, with the Tynesiders having been impressed with his return of 11 goals in 28 appearances this season.
However, the move could spark a bidding war for the MK Dons youngster.