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The company will pay £22m ($34.24m) for a share in the English premier league club.

As part of the deal, Granada will manage a wide range of commercial issues for Liverpool FC, including publishing, electronic media rights and merchandising.

The revenue from the new issue of shares will allow manager Gerard Houllier to spend £20m on buying new players.

Another £2m will go towards the football academy it hopes will produce young players of the quality of home grown strikers Michael Owen and Robbie Fowler.

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In a statement, Granada and the Anfield club said: "The boards of Liverpool and Granada are pleased to have announced they have entered into a ground-breaking strategic partnership.

"These are new shares created by Liverpool and so the chairman David Moores is not selling any shares."

Liverpool Chief Executive Rick Parry speaks about the Granada deal

Granada said it would take on a range of commercial functions at the club, allowing management to concentrate on winning football matches.

It said the move brought forward the possibility of creating a Liverpool FC television channel.

Liverpool Football Club, England's most successful ever after a series of English league and European Cup wins in the 1970s and 1980s, has lost its pre-eminent position in the 1990s to its fiercest rivals Manchester United.

Long controlled by the Littlewoods Pools founder Sir John Moores' family, the club has recently been looking at possible ways of raising extra cash.

These have included a partial sell off through the listing of shares on the London stock market.

However the deal with Granada allows it to raise funds while club chairman David Moores remains in control, with his stake reduced from 58% to 51%..

The statement said the strategic partnership would ensure the club maximised its commercial potential for the benefit of shareholders and fans.

World leader

Mr Moores said: "With the increased capital strength and wealth of commercial expertise the partnership brings, I am confident that together we will develop the Liverpool FC brand into a world leader.

"Most importantly, the partnership will help bring success on the field which will always be our number one priority."

Granada effectively owns a third of Britain's biggest and most popular commercial television network ITV and produces most of its programming.

This move means Granada will have influence within the club when the television rights for the Premiership matches come up for renewal in 2001.

It will also be in a position to play a part if and when clubs are allowed to sell their own rights to individual matches.

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Granada has the means of delivering such coverage as a 50% owner of the digital pay television venture ONdigital, which competes with BSkyB's pay television channels which currently own the rights to British premiership football.

The move comes just weeks after BSkyB's bid to buy Manchester United was ruled offside by UK competition authorities. That decision prompted another media group, cable firm NTL, to withdraw its bid for Newcastle United.