Rafael Benitez is keen to sign the 24-year-old Argentinian centre back and has made a £8m bid, according to reports.
But Real have offered him a new contract that matches Liverpool's salary offer.
"It's practically impossible that Milito will go," said chief executive Jeronimo Suarez.
Real keen to keep Milito
"Our interest is to keep him and for that reason he has a very good offer from the club to extend and improve his contract."