Dietmar Hamann is expected to agree a move to Manchester City, paving the way for Joey Barton to move from Eastlands.
The future of the two players could be decided by the weekend, with City leading the race to sign 32-year-old Hamann ahead of Bolton on a free transfer.
Bolton believed they had captured the former Germany international, who was rumoured to have had a medical at the Reebok Stadium this week before flying back to his homeland to work as a World Cup pundit.
City are bracing themselves for a bid from Middlesbrough for Barton but insist they have had no contact yet with new Boro boss Gareth Southgate. They also refused to make any comment on the Hamann situation.
Boro have been equally tight-lipped over Barton, a player they were chasing during the last transfer window when the Liverpool-born midfielder was in the middle of a contract wrangle which enraged City fans.
He was offered a new four-year deal on £28,000 a week but turned it down. That offer is still on the table, but City would almost certainly be prepared to do business with Boro for a fee of around £3million.
The arrival of Hamann would be a major boost for City manager Pearce, whose squad is somewhat thin after several summer departures. Only Paul Dickov, from Blackburn, and French midfielder Ousmane Dabo, on a free transfer from Lazio, have arrived at the club.
Pearce, though, sees Hamann and Dabo - an experienced Serie A player - as a solid central-midfield partnership for next season.
Hamann has played in a World Cup final and a European Championship final for Germany and has been a key figure in Liverpool's UEFA and Champions League successes, having won two German titles with Bayern Munich.
Liverpool boss Rafael Benitez sees Steven Gerrard, Xabi Alonso and Mohamed Sissoko ahead of Hamann now, although the German still has one year of a contract left.
Meanwhile, Gabriel Paletta has completed his £2million move to Anfield after signing a four-year contract.
Having agreed to join Liverpool from Atletico Banfield in February, the 20-year-old Argentina Under-21s international tied up the transfer today.
Reds manager Benitez is delighted to have secured Paletta's services, comparing him to Anfield stalwart Jamie Carragher and veteran Argentina defender Roberto Ayala.
Benitez said: 'I've worked with other Argentinian defenders in the past and there is a good tradition of tough, aggressive and tactically strong defenders from the country.
'Paletta is very tough and he's exactly the sort of player we need who will suit the Premiership.
'When you talk about the Argentinian defenders I worked with in Valencia, Paletta is more like Ayala than [ex-Red Mauricio] Pellegrino.
'If you're talking about Liverpool, he's more like `Carra' [Jamie Carragher] than Sami Hyypia. This is good because we will have a balance in the style of defenders.
'He is a defender with a lot of aggression, and we're sure he has a great future. He will learn a lot here, like Daniel Agger, and provide competitiveness in our defence.
'We were watching him in the World Under-21s championships in Holland. That's when our scouts spotted him, and we identified him as the kind of player we'd like.'
Benitez added on the club's official website, www.liverpoolfc.tv: 'He has attracted a lot of interest from top clubs in Argentina like River Plate and Boca Juniors.
'River Plate even reserved a number six shirt for him, so we had to move quickly to sign him. We're delighted to have done the deal now.'