Newcastle have revealed they have agreed a club record fee with Real Madrid for England's Michael Owen.
Owen, 25, had indicated his desire to rejoin Liverpool but is prepared to join Newcastle on a season-long loan if a move to Anfield cannot be agreed.
But a Newcastle statement said: "Newcastle United have met Real Madrid's asking price and conditions."
Newcastle, whose current record fee is £15m for Alan Shearer, are now waiting to hear from Owen's advisers.
Owen was thought to be available for about £12m, but the Newcastle statement added: "The agreed fee will be a record transfer fee for Newcastle United. It is now up to the player and his adviser."
Madrid have promised to help Owen return home to boost his World Cup hopes.
Owen said: "I said that my ideal situation was to start the season in the Real Madrid team and if not I would prefer to return to Liverpool.
"If the transfer cannot be finalised in time I have agreed to go to Newcastle."
Liverpool boss Rafael Benitez has said he has no plans to bring Owen back to Anfield.
A club spokesperson told BBC Sport on Wednesday they have no plans to make a statement on "press speculation".
Real Madrid director of communications Antonio Garcia Ferreras confirmed they had not had an offer from Liverpool.
He said: "This morning Real Madrid and Newcastle United have reached the principles of an agreement on the conditions of Michael Owen's transfer to the English club.
"There is still no agreement between Michael Owen and Newcastle. At the moment we have not received any offer from Liverpool."
Owen spent much of his first season at the Bernabeu coming off the bench and the arrivals of Brazilian strikers Robinho and Julio Baptista this summer have seen him slip further down the pecking order.
The former Liverpool star had earlier indicated he was willing to stay and fight for his place, but after talks with president Florentino Perez has now had a change of heart.
He added: "I need to be playing regularly in World Cup year.
"I am most grateful to Senor Perez for his personal concern about my career. I have really enjoyed being part of his Real Madrid team."
Benitez has insisted his main priority is to sign a centre-back and already has Djibril Cisse, Fernando Morientes and Peter Crouch as his frontline strikers.
But Owen's return to Anfield would be welcomed by Liverpool fans, having scored 158 goals in 297 games in his first spell at the club.
Owen finished with 16 goals for Real last season despite being used primarily as a substitute.
On Tuesday Everton manager David Moyes revealed his club had spoken to Owen's representatives, but the player rejected a move to Goodison Park.
Lyon have also expressed an interest in the England striker, but he appears set for a return to England.