The 28-year-old Saunders, who once received a free transfer from Swansea, will complete the third seven-figure transfer of his career if he agrees to follow Ray Houghton and Steve Staunton from Anfield to Villa Park. In 1988 he joined Derby from Oxford for pounds 1m, moving on to Liverpool for a then-British record of pounds 2.9m just over a year ago.
He scored 23 goals in his first season with Liverpool - including nine in Europe though only 10 in the League - but has not found the net since last month's Charity Shield match against Leeds, and was substituted during Liverpool's draw against the champions on Saturday.
Ron Atkinson's renewed interest in Saunders, whom he first tried to sign from Derby last summer, follows a failed offer of pounds 400,000 for Tranmere's John Aldridge, Manchester United's unwillingness to part with Mark Hughes, and the refusal of Aberdeen's Dutch international forward Hans Gilhaus to extend his trial period. Graeme Souness, the Liverpool manager, said after last night's game against Southampton that he had accepted the Villa offer and it was now up to the player.
Villa went two months without scoring last season, and are currently averaging only a goal per game in the Premier League. A partnership between Saunders and Atkinson's namesake, Dalian, would be arguably the fastest in the country.
The Football Association and the Premier League chairmen are embroiled in a power struggle for jurisdiction over the new competition which will see the FA veto the sponsorship the clubs expect to conclude next week.
The 22 chairmen meet on Monday for a third attempt to agree a deal which would see the breakaway elite become the Carling Premier League, but the FA warned yesterday that it would not allow a titled sponsorship.
The governing body is instead seeking a multi-faceted sponsorship which would encompass the England team and the FA Cup, as well as the Premier League. Its negotiations have reached an advanced stage, with an announcement expected in October, and it is not prepared to allow the clubs' deal with Bass, the brewing conglomerate of which Carling is a lager-producing subsidiary, to undermine them.
Graham Kelly, the FA's chief executive, pre-empted Monday's meeting with the following statement: 'The Football Association has serious reservations about the mooted titled sponsorship of the FA Premier League. Like the FA Cup, we feel the integrity and the name of the FA Premier League should be sacrosanct.
'Moreover, the strategy of title sponsorship is contrary to the package-of-sponsors route which we originally agreed with the clubs when working together on the television deals. The ink is only just dry on the constitution of the FA Premier League. It is far too early to be considering this change of tack.'
Trevor Phillips, the FA's commercial director, is working on a 'package of sponsors', who would be associated with the Premier League, FA Cup and England team in much the same way that multi-national companies sponsor the World Cup and Olympic Games. 'No one is allowed a titled sponsorship of those events. We believe we should do things the same way. Would people really like to see the Coca-Cola FA Cup?'
Phillips confirmed that the FA would veto the Carling sponsorship if it received the two-thirds majority it needs on Monday. Opposition to the deal will again be led by Liverpool, who have a pounds 1m-a-year sponsorship with one of Carling's rivals - Carlsberg.
BSkyB, which televises Premier League matches, is sponsored by Foster's, and opponents of Monday's proposition will point to the absurdity of it announcing 'The Carling Premier League, brought to you by Foster's Lager'.