Pennant will wear the number 16 shirt at Anfield

The price for the 23-year-old winger, who has joined on a four-year contract, could rise to �8m with add-ons.

The Blues initially turned down a �3.5m offer and negotiated a higher fee as they have to give Pennant's old club Arsenal 25% of the cash received.

Pennant, who joined City last summer after a successful four-month loan spell, is expected to immediately join his new team-mates in Switzerland.

And he could make his debut for the club he supported as a child on Saturday against Kaiserslautern in Liechtenstein.

"If I'm needed, I'm fit to play," Pennant said.

"I've dreamt about this since I was a little boy so to actually be here and to be able to wear a Liverpool shirt and play at Anfield is a dream come true. I'm over the moon.

"My best will come at this club because I am playing alongside top quality players who will only help me develop my game.

"This is the best club in the country and the best club to be at so if I can't do it here then I won't be able to do it anywhere.

"I've still got a long career ahead of me because I'm still young, but hopefully I'll enjoy all my good times here.

"I've come here to be successful and it'd be a great feeling if I can win trophies as a Liverpool player."

Pennant added: "I had a great time in my 18 months at Birmingham City, and everybody, including the fans were absolutely fantastic to me.

"Hopefully I will have the opportunity to play against them in the Premiership sooner rather than later, because that is where they deserve to be.

"When I had my problems, Steve Bruce and the club showed faith in me.

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"I'll always be grateful to Steve and the rest of the coaching staff because they have provided me with the opportunity to take on a new challenge in my career."

Pennant's arrival solves Rafael Benitez's search for a right-sided midfielder, with his first choice, Sevilla's Daniel Alves, proving too pricey at �12m.

The England Under-21 international, who joined Birmingham for �3m, joins Wales striker Craig Bellamy at Anfield as Benitez looks to invest in young British talent.

But in Pennant, the Liverpool coach has purchased one of football's most notorious players.

In 2005 the midfielder become the first footballer to play in the Premiership while wearing an electronic tag. He had served 21 days in jail after being found guilty of drink driving while banned and having no insurance.

Originally Pennant had been banned from driving for 16 months in 2004 after being seen travelling in the wrong lane in Paddington, west London.

Also in 2005 it was reported that Birmingham sent the player home from training after he turned up under the influence of alcohol.

And in a separate incident that year, Pennant was alleged to have become involved in an argument with a man outside a restaurant on the Greek island of Zante, which led to the man punching him.