The Reds have been closely linked with the Germany international of Turkish origin following the appointment of Jurgen Klopp.
Klopp is credited with first unearthing Gundogan’s talent during his time in charge of Dortmund and they are reported to still have a close relationship.
Gundogan would become the first Dortmund player to jump ship and join Klopp at Liverpool if he goes ahead with the move.
City are currently rumoured to be closest to clinching a deal with the 24-year-old midfielder.
Citizens sporting director Txiki Begiristain has already met with Gundogan’s uncle and agent Ilhan Gundogan regarding a summer deal.
Liverpool are also linked with Empoli’s Piotr Zielinski and Borussia Monchengladbach’s Granit Xhaka.