The Reds are eyeing a potential swoop to sign the England international in the 2021 summer transfer window.
The Premier League champions are looking at Watkins as a potential recruit to bolster their attacking options.
The Merseyside outfit have been keeping a close eye on the Englishman’s performances for Villa ahead of the 2021-22 Premier League season.
The 25-year-old has chipped in with 12 goals and three assists in 30 Premier League matches this season.
Villa signed Watkins from Championship outfit Brentford last summer.