In a shock announcement, Liverpool confirmed that they rejected an offer from Premiership rivals Chelsea for their star striker Fernando Torres.

The offer is believed to be around £35-£40m which is significantly short of Torres' release clause in his contract with Liverpool which is around the £50m region.

A Liverpool spokesman said, Chelsea have made a bid for Fernando, which has been turned down. The player is not for sale.

Chelsea declined to comment. They have a long-standing interest in Torres, who had been off-form for much of 2010, but is gradually recovering some of it after the change in management at Liverpool when Kenny Dalglish took over from Roy Hodgson.

Torres, who scored twice in Liverpool's 2-0 win over Chelsea in November, would have been eligible for Champions League football - a further point of attraction for Chelsea. Chelsea's other transfer target - Benefica defender David Luiz - will not be eligible for Europe's elite tournament. Considering the transfer window closes at 2300 GMT on Monday, Chelsea still have time to offer an increased bid. 

Chelsea's pursuit of Torres and David Luiz show that they are prepared to flex their financial muscle to bolster the squad which has been stretched after a series of injuries to key players. After selling players such as Joe Cole, Ricardo Carvalho, Deco and Michael Ballack in the summer, Chelsea had attempted to draft in the best of their youth crop. That plan backfired though as 17-year-old Josh McEachran apart, none of the other youngsters managed to make an impact in the senior squad.

Liverpool defeated Fulham 1-0 on Wednesday and moved up to seventh in the Premier League. However, they still face a mighty task if they are to qualify for the Champions League. To that effect, Liverpool's new owners, the Fenway Sports Group (FSG), have made funds available for strengthening the squad. Liverpool are currently negotiating with Dutch club Ajax Amsterdam for Luis Suarez and they recently had a bid for Blackpool's Charlie Adam rejected.