Fernando Torres believes Liverpool need a "much, much more complete squad" and has told the club's owners they have to invest to rescue the team.
Having competed with Manchester United for the title last season, Liverpool are currently 12 points behind leaders Chelsea in seventh place and are now out of the Champions League, FA Cup and Carling Cup.
Rafael Benitez has faced a major backlash after Wednesday's FA Cup defeat to Reading, but Torres believes the manager has been restricted by the lack of transfer funds.
"It's frustrating," he said. "We finished second last season. This season should have been a turning point for us, a chance to do something great - Manchester United sold Carlos Tevez and Cristiano Ronaldo, while Chelsea didn't sign anyone - but it hasn't been.
"It's now the owners' turn. They have to sign players so that this does not happen again. If we want to compete with United and Chelsea we need a much, much more complete squad. We need more genuinely first-class players and we can't let our best players leave."
Securing Champions League qualification and winning the Europa League are the only realistic ambitions left for Liverpool this season now and Torres, who picked up an injury against Reading, admits they cannot afford to fail.
He told Four-Four-Two magazine: "We didn't want to win the Europa League at the start of the season but it's a reality now. Now we have to win it. Anything less than winning the tournament would be terrible.
"We need to improve, we need to take responsibility and we need to get into the top four and win something. We have virtually no chance of winning the title now. Now we need to make the best of this situation."
Reports on Thursday suggest Benitez is set to be given until the end of the season, but it has been widely suggested that the owners are already looking at other candidates for the position. Guus Hiddink has been tipped as a leading contender after Russia's failure to reach the World Cup.
Hiddink is still contracted to Russia but looks set to leave and has revealed he would welcome the chance to return to the Premier League. However, given the Dutchman's close ties to Chelsea owner Roman Abramovich, a switch to Anfield could be problematic.
"I have to speak to the federation president before making any decision on my future, but it is true that I would like to coach in England again," he said in the Daily Mail. "After all the support I've received from Roman Abramovich, I owe it to them to discuss anything with them first."
Benitez, meanwhile, knows the importance of Saturday's trip to Stoke in the Premier League but admits he faces a challenge to inspire the squad after recent disappointments.
"We have to start again," he said. "All I can do is start thinking about the next game. We can only carry on and be ready for the next game. All we can say is that we must focus on the next challenge, but I accept that it will be tough to raise spirits.
"But we cannot change the Reading result. We must move forward. We have to think only about the future."