The report claims that the 25-year-old has been disappointed due to his lack of first team opportunities at Upton Park after his injury woes.
It is understood that Liverpool manager Brendan Rodgers is extremely concerned with his defence department this season and expect to table a summer bid for the New Zealand international in order to bolster their defence squad.
The classy defender Reid, who started his career at Danish side FC Midtjylland, had joined the Hammers in 2010.
Reid is a known for his fine displays earlier in the season, alerted the attention of top Premier League clubs to his ability.
However, It will be an exciting to see if West Ham are interested in doing business with The Reds.