However, it appears only a matter of time now before he leaves the club he guided to Champions League glory in May.

The Liverpool Echo claims Gerrard has turned down the offer of a four-year-deal at Anfield, and chief executive Rick Parry told the newspaper: “We desperately want to keep Stevie and we’ve told him we don’t want him to leave.

“However, in rejecting our offer of a new contract he has indicated he wants to go.”

Gerrard’s agent, Struan Marshall, informed Liverpool of the decision earlier today.

The news will come as a devastating blow to the club's army of fans, who have afforded the Huyton-born star cult status.

Having opted against a switch to Chelsea at the 11th hour last summer, most observers felt May’s stunning Champions League triumph over AC Milan in Istanbul would convince Gerrard his long-term future remained at Anfield.

In the immediate aftermath of that victory, Gerrard claimed he could not leave and indicated a desire to sign a new contract.

When talks were not immediately forthcoming, doubt appeared to enter his mind and his patience finally snapped on Wednesday when Parry arrived for a meeting with Marshall armed not with an offer but a request for the player’s terms.

Believing the strategy was standard negotiating practice, Parry felt the situation was under control.

Instead, he awoke on Sunday morning to face a battery of headlines suggesting Gerrard was ready to quit.

At a hastily-convened meeting at Liverpool’s Melwood training base last night, Parry followed up manager Rafael Benitez’s earlier comments that he wanted Gerrard to stay with the club “for the rest of his life” by attempting to make him the highest-paid player in Reds history.

Gerrard slept on his decision overnight, then turned up for training this morning, although by then the die had presumably been cast.

The word from Anfield is that they will not allow Gerrard to leave until he has submitted a formal transfer request, although given the hardening of attitudes, and Chelsea's obvious desire to sign him, such a move appears to be just a matter of time.

So far, Chelsea have refused to enter any public debate on Gerrard other than to confirm they had made a bid.

Real Madrid have confirmed their interest and with fellow Englishmen David Beckham, Michael Owen and Jonathan Woodgate already at the Bernabeu, a switch to Spain cannot be ruled out.

Neither can a cheeky approach from Manchester United boss Sir Alex Ferguson, who has never hidden his admiration for the Gerrard and is armed with a more flexible transfer budget than previously thought.

However, Ferguson does know the odds on any player leaving Liverpool for United are high, let alone one with Gerrard’s Anfield pedigree.

This all places Jose Mourinho as firm favourite to add Gerrard to a dream midfield which already includes Claude Makelele and Frank Lampard.

Backed by Roman Abramovich’s seemingly limitless funds, Mourinho could break the £40m barrier to land Gerrard, shattering the previous highest deal between two English clubs, the £29.1m Manchester United paid Leeds for Rio Ferdinand in 2002.