The Anfield legend believes his old side can still make it to Europe, despite last week's loss.
The Reds were beaten 2-1 by United at Anfield last Sunday, courtesy of a brace from Juan Mata, leaving Louis van Gaal’s side five points ahead of their fierce rivals in the battle for fourth spot.
That defeat came as a massive blow to Brendan Rodgers’ men, who before that game had been on a magnificent run of form to put them firmly in contention with the numerous side battling for European qualification.
Rush though, insists all is not lost for Liverpool and that the top four is still a possibility.
"I still think there's a possibility [of top four]," said Rush.
"It was difficult losing to Manchester United with that five-point gap but it was 10 points [in December] and now it's five.”
Despite remaining positive, Rush does admit that the Reds have made it difficult for themselves with the defeat to United last weekend.
Rodgers' side take on Arsenal at the Emirates next in what could prove to be a crucial game for their Champions League aspirations, while they also take on Jose Mourinho’s Chelsea, again away from home.
However, beyond those two fixtures they mostly take on teams in the bottom half of the table, and as far as Rush is concerned they need to be aiming to win all of their other games to maintain a fighting a fighting chance of the top four.
"You've still got to believe - they have some tough games coming up,” he added.
“Arsenal and Chelsea may be difficult but if you're looking to finish top four, then you have to be looking to win all of the other games."