Villa rejected a new offer for Barry from Liverpool on Thursday - this time believed to be around the £15million mark - but the England midfielder has told O'Neill he wants to join Liverpool in order to play Champions League football and boost his international prospects.

O'Neill told the BBC: "It's difficult (to break into the top four) but that's what you're in the game for. If it's without Gareth Barry, we'll still have a go."

He added: "If Manchester United are having a struggle keeping hold of (Cristiano) Ronaldo, I guess the rest of us have a bit of trouble,

"Gareth and I had a little chat when he got back from holiday and he has said he would fancy going to Liverpool.

"That's obviously a big setback to us, but the offer from Liverpool is just not acceptable.

"It's very frustrating. We finished sixth last year, he was a major part of that and he has been a splendid player for us for some considerable time."