The England international, who recently turned 18, is expected to sign the five-year deal in the next week, according to BBC’s Ben Smith.
The new deal will see Sterling earn £30,000 per week, as opposed to £2,000 per week on his current youth contract.
There had been speculation surrounding Sterling’s future, with some reports suggesting his family were keen on a return to London. But Smith reports that all parties are happy with the new deal and that Sterling “has always been keen to continue his development at Anfield”.
The news of Sterling staying at Liverpool comes as a huge boost and on the same day deals for similar young attacking English talents Daniel Sturridge and Thomas Ince were reported to be expected in the early days of the January transfer window.