Rafael Benitez is said to have told Murphy he will only be a squad player at Liverpool and if he wants first team football he will have to move elsewhere.
A source close to the player said: "Danny is devastated. He really loves Liverpool and thought he would spend the rest of his career there. But it has left him with no choice. He would prefer to stay in the Liverpool area because he is newly married and settled on Merseyside."
Everton are also said to be interested in the player but whether they can raise the money to buy him is debatable.
