Danny Wilson's dream move to Liverpool has stalled - because the young Rangers defender does not meet a 'homegrown' quota system being introduced by the English Premier League.

Now the cash-strapped Ibrox club could lose out on up to £3million if the 18-year-old remains in Glasgow next season before leaving when his contract expires.

Sportsmail understands Wilson had proven particularly attractive to the Merseyside giants because they are planning for new regulations which will demand eight homegrown players in every topflight club's 25-man squad.

Liverpool initially believed it applied to footballers from across the whole of the British Isles, but their interest has now cooled after it emerged only youngsters brought through at English and Welsh clubs will qualify.

This has forced a hitch in the projected Wilson deal, which had seen Liverpool offer a £2.5m down payment, with a further £1.5m in add-ons.

While it is believed they still want to sign the PFA Scotland Young Player of the Year, it will not be with the same urgency as before. Wilson has rejected all offers of an extension to his contract with Rangers.

And it's understood that, if no agreement can be struck with Liverpool at the moment, he will resolve to remain at Ibrox next season before becoming eligible to sign a pre-contract elsewhere in January.

Any club signing Wilson would then have to pay only around £650,000 in compensation under FIFA rules relating to players under the age of 24.

FA Premier League chief executive Richard Scudamore said: 'All clubs must declare their 25-man squad at the end of August after the close of the transfer window.

'No more than 17 of those players can be over the age of 21 and not home-grown.

'The definition of homegrown is trained for three years under the age of 21 by somebody in the English and Welsh professional system. It is not in a club's interests to stockpile players. It will make buying home-grown talent more attractive.'

Rafa Benitez has already started to adjust Liverpool's staffing levels, with young Englishman Jonjo Shelvey signing from Charlton Athletic.

This story has been reproduced from today's media. It does not necessarily represent the position of Liverpool Football Club.