The 25-year-old centre-back, who was in the final six months of his contract, has completed his move for an initial £500,000, with a further £1.1million of add-ons structured into the deal.
The Premier League champions have been forced into a short-term move after a spate of injuries in the centre of defence.
Virgil van Dijk and Joe Gomez are both sidelined with long-term injuries while Joel Matip has also been in and out of the side with numerous knocks and niggles.
Midfielder Fabinho has been forced to deputise at the back but has also spent time on the sidelines causing manager Jurgen Klopp to take emergency action.
Davies arrives to help plug the gap with Ozan Kabak of Schalke also a deadline-day arrival on Merseyside.
Here we take a closer look at the player set to be the answer to Liverpool's defensive injury crisis.
Davies, born in Barrow-in-Furness in 1995, was spotted playing for Furness Rovers aged 11 and was signed up for Preston's youth system, through which he progressed to eventually captain their academy team.
First taste of senior football
He made his first-team debut in January 2013 aged 17, playing 83 minutes as a left-back in a 2-2 draw at home to Coventry in which he provided an assist. He would make only two more appearances before manager Graham Westley was sacked the following month. Davies signed his first one-year professional contract at the end of the season having been named Scholar of the Year.
Davies was shipped out on loan to York for the 2013-14 season, initially for a month. His stay was extended and he eventually played 47 matches for the Minstermen, helping them to the League Two play-offs where they lost 1-0 on aggregate to Fleetwood and winning the club's Young Player of the Year Award. England and Burnley goalkeeper Nick Pope was also a mainstay of that York side.
Three clubs in one season
Having signed a new two-year contract in the summer of 2014, League Two Tranmere was his next loan destination at the start of the 2014-15 campaign but after a short spell he dropped into the National League with Southport, then returned to Preston because of injury problems at his parent club.
A brush with celebrity
Davies' move to Anfield will require a step up in his social media game. The defender has made just 93 Instagram posts in just over six years and 110 Tweets in nine years. Meeting former England cricketer-turned-TV celebrity Andrew Flintoff after a 2015 pre-season friendly at Ashington appears to be a highlight.
Limited chances at Deepdale in the first half of the next two seasons saw Davies farmed out on loan for two Januarys in succession, making 19 and 22 appearances for Newport and Fleetwood respectively, before a return to Preston saw his career take off under manager Alex Neil, playing 35 times in 2017-18 and making 41 appearances in 2018-19 as he won the club's Player of the Year award.
Style of play
Davies is accomplished on the ball and being naturally left-sided is also more than capable of filling in at left-back. That alongside his age profile, low cost and availability make him the perfect addition for Klopp’s injury-ravaged back-line.
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