Housing minister Grant Shapps has called on Liverpool to make a swift decision on their stadium plans to prevent ongoing uncertainty in the area.
Club owners Fenway Sports Group's preferred option is to redevelop Anfield but that is looking increasingly difficult.
The alternative is a new build on nearby Stanley Park which offers greater regeneration potential for the area.
"Local people in Anfield need certainty and a definite decision on the future of their neighbourhood," Shapps said.
"In the interests of the wider community, the club needs to make a swift decision on whether they plan to build a new stadium or stay where they are - either way the residents around Anfield deserve to know.
"The delay is causing unnecessary uncertainty for the community.
"Local residents are living in limbo. The council has already asked for extra time for the lease on Stanley Park by six months to allow the club time to explore all options, but the quicker Liverpool FC makes a decision, the more options they have."
The club are still assessing both options and have not put a timescale on a decision.