Degen has struggled with form and fitness since his move to Anfield
New Liverpool manager Roy Hodgson has told defender Philipp Degen he is free to look for a new club.
The Switzerland international has struggled to make an impact since arriving at Anfield on a free transfer from Borussia Dortmund in July 2008.
The 27-year-old has made only eight starts and five substitute appearances.
"We have had an amicable conversation and he wants to play football," said Hodgson. "We won't stand in his way and he is free to look for another club."
The move continues Hodgson's rebuilding efforts since leaving Fulham to take over at the club on 1 July.
England international Joe Cole and Serbian forward Milan Jovanovic have already arrived at Anfield on free transfers, while Liverpool have also agreed a deal with Rangers to sign teenage defender Danny Wilson.
And captain Steven Gerrard, who has long been linked with a move away from the club this summer, appears to have committed his immediate future to the Merseysiders.
Hodgson will now be hoping to convince two of his other key players - striker Fernando Torres and midfielder Javier Mascherano - to do likewise.
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