Gareth Barry's transfer to Liverpool looked doomed to failure last night after Aston Villa's manager, Martin O'Neill, revealed that the club are ready to offer him a new contract and Robbie Keane prepared to travel to Anfield for a medical.

O'Neill will hold talks with Barry this week about a new four-year deal in an attempt to bring one of the summer's longest-running transfer stories to a close and keep his captain at Villa Park. Liverpool maintain that they will not meet Villa's asking price of £18m despite Rafael Benítez's long-standing admiration for the midfielder and Barry's willingness to go public with his desire to leave.

Barry, who received a mainly positive reaction from Villa fans when he came on as a substitute in their Intertoto Cup victory against Odense on Saturday, has one year remaining on his present deal and will be offered a contract that could increase his pay to £60,000 a week, with the promise of a lucrative testimonial after 10 years of service. More pertinently for the 27-year-old, O'Neill will also give him a guarantee that he can walk away next summer if Villa fail to advance on last season's sixth-place Premier League finish.

O'Neill has added Steve Sidwell and Brad Friedel to his squad this summer but, after Wilfred Bouma's serious injury on Saturday, Villa are without a recognised full-back with the new season only three weeks away. Their victory over Odense took them into the qualifying stages of the Uefa Cup.

"The clear message regarding Gareth is that everyone at Villa Park wants him to stay," O'Neill said. "I will talk to Gareth first of all. Our position has not changed - like I've said before, we will do everything we can [to keep him]. The player belongs to us. Liverpool know the situation. It's not my job to pick up the phone to them.

"It's very obvious we value him more than Liverpool do. He's a top European player. The price we are asking is true and realistic. I think it's really, really cheap actually but that doesn't mean I want him to go. But if he felt he wanted to leave he saw the reaction on Saturday - it was incredibly positive.

"It's obvious that we have some serious work to do with regards to getting players in. But I'm still confident that we will make progress with it in the next few weeks."

Benítez is prepared to sell Xabi Alonso to raise funds which may help his pursuit of Barry but so far there have been no takers, with no one willing to meet Liverpool's £16m valuation of the 26-year-old.

Keane will undergo a medical today and his £20m move from Tottenham Hotspur may be completed in time for the forward to make his debut for his boyhood heroes in Liverpool's friendly in Spain against Villarreal on Wednesday.

Liverpool have offered the Republic of Ireland captain a five-year contract worth £80,000 a week and negotiations continued throughout the weekend after Tottenham reluctantly agreed to sell Keane, who scored 80 goals in 197 Premier League appearances during six years at White Hart Lane, on Friday evening.

Keane's arrival will take Benítez's spending to about £32m since his side finished 11 points adrift of the Premier League champions, Manchester United, last season. The Liverpool manager has already drafted in the Brazilian goalkeeper Diego Cavalieri, full-backs Philipp Degen and Andrea Dossena, and the teenagers David Ngog and Emmanuel Mendy.

Benítez has raised about £20m by selling Scott Carson, John Arne Riise, Danny Guthrie and Peter Crouch.