Liverpool transfer target Demarai Gray has reportedly been told he is free to leave Birmingham City for £3.5million during the January transfer window.

The Mirror is reporting the buyout clause in Gray's Birmingham contract decreases to £3million during the summer, meaning the Blues are likely to sell the 19-year-old for a higher fee in January.

Gray signed a one-year contract extension with Birmingham during the summer, but now appears set to leave St Andrews, with Premier League clubs Liverpool and Bournemouth believed to be the most likely destinations.