Sterling emerged as a key player for the Reds in the final few months of last season, and the 19-year-old scored nine times as the Anfield side mounted their strongest title challenge for 24 years.
Brendan Rodgers' side eventually finished two points behind Manchester City, and Sterling's superb form was rewarded with a place in the England World Cup squad.
The teenager turned in an eye-catching performance as the Three Lions were beaten 2-1 by Italy in their opening game, and the youngster was one of the standout players for Liverpool in their pre-season tour of the United States.
Sterling will have added responsibility placed on his shoulders this coming campaign, following the £75m sale of Luis Suarez to Barcelona, and the five-time European Cup winners are set to show their faith in the versatile winger by offering a fresh deal, according The Mirror.
The report claims that Sterling will offered a pay rise to around £120,000 a week, which would be four times than his current £30,000 weekly salary.
As well as a reward for Sterling's form, the move is also seen as a way of safeguarding the wideman's value amid interest from European Champions Real Madrid.
Los Blancos are understood to have been impressed with Sterling's form last season, but the Anfield giants are ready to move fast to tie down teenage sensation to a long-term deal.
Sterling was given his debut by Kenny Dalglish in the final few months of the Scot's reign as manager, but it has been under Rodgers that the player has truly flourished.
The Northern Irishman gave the youngster a start in his first match at Anfield in a 2-2 draw with Manchester City back in August 2012, and Sterling made 24 appearances for the Reds in his breakthrough season.
Reds boss Brendan Rodgers has bolstered his squad to the tune of £90m this summer with the likes of Adam Lallana, Rickie Lambert, Lazar Markovic, Emre Can, Dejan Lovren and Divock Origi - who will spend this coming season on loan at former club Lille.