Liverpool and Chelsea are set to engage in a bidding war for Real Madrid's Argentine midfielder Fernando Gago.

Both clubs are reportedly tracking the dynamic midfield lynchpin who plays the role of defensive midfielder for Madrid and Argentina.

British newspaper The People reported that Gago's displays in the middle of the Los Merengues midfield has made the two English giants sit up and take notice.

Gago goes about the game with a no-nonsense attitude, sweeping up defensively and launching attacks with his range of passing.

Another English side Arsenal might join in the fray if rumours of their charismatic captain Cesc Fabregas joining Barcelona does bear fruit.

Madrid signed Gago in 2007 for 20.5 million euros and has made over 60 appearances for the Spanish side.

Whether Chelsea and Liverpool can tempt Gago to quit the Bernabau is questionable as the Argentine is happy at the club and is very highly regarded by the decision-makers at Madrid.