The 25-year-old will join Bristol City on loan until the end of the season, with a view to make the deal permanent in the summer.
Walsh left Everton to join Bristol City on Friday.
Everton lost against Liverpool at Anfield in the FA Cup on Saturday.
Bristol City want to bring Liam Walsh to the Championship from Everton - but Nottingham Forest know what talents The Toffees have in their academy.
Bristol City look set to sign a central midfielder, which may alert Leeds United and Newcastle United.
Everton midfielder Liam Walsh is reportedly on brink of leaving the Premier League side for a permanent Championship move.
Everton youngster Liam Walsh has not had many opportunities on loan at Birmingham but could a switch to Sunderland change all that?
Barnsley boss Paul Heckingbottom is said to want Everton's Walsh at Oakwell next season.
Everton youngster Liam Walsh is reportedly wanted by Bolton Wanderers, Charlton Athletic and Millwall.
Everton youngster Liam Walsh is a player who could break into the Everton first team this season.