The Italian striker is said to have agreed to a parting of ways.
Balotelli returned to training at his parent club last week after spending last season on loan to AC Milan.
The Serie A giants opted against making the deal permanent, which has left Liverpool facing the prospect of losing him for nothing next summer.
The Reds are now said to be looking for alternative buyers, with the 25-year-old agreeing to a parting of ways despite apparently displaying a professional attitude following his return.
Balotelli, who cost a reported £16 million two summers ago and is thought to earn £90,000 a week, has drawn interest from clubs in Italy and China, according to the Mail.
The troubled star experienced a productive start to life as a footballer, winning league titles at Manchester City and Inter Milan, with whom he also won the Champions League in 2010.
An initial spell at AC Milan appeared to have coaxed out his best form once more, though the past two campaigns have not gone to plan.