Liverpool are in the market for a right-back after they decided to release Glen Johnson.
Atletico Madrid defender Javier Manquillo, who is half way through a two-year loan spell at Anfield, has found it hard to break into the Reds first-team this season and Jon Flanagan is out for another nine months because of a knee injury.
Given that Clyne has one year left on his contract, the Merseyside club are hopeful of luring the 24-year-old to Anfield, but a £10million bid has reportedly been rejected.
United are aware of Clyne's contract situation and scouted the defender earlier this season, but Press Association Sport understands they are no longer interested in the England international.
That leaves Liverpool as the front-runners for Clyne's signature and they are said to be contemplating a second bid for the full-back.
A fortnight ago, Southampton sounded optimistic about their chances of persuading Clyne to extend his contract.
Director of football Les Reed said discussions with the Londoner had been "very, very positive" after the player changed his agent.
Clyne has been a regular in the Saints first team since he moved to St Mary's Stadium from Crystal Palace three years ago.
Clyne enjoyed his finest campaign at the south-coast club last season and earned his first England cap against Slovenia last November.
He has since played three more times for Roy Hodgson's side and has been included in the England squad for the upcoming double-header against the Republic of Ireland and Slovenia next month.
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