The Reds have been linked with a move for the England international, who has a £10.5million buyout clause.
Reports suggested that Liverpool joined the list of Premier League clubs looking to take him away from St James' Park following their relegation to the Championship.
However, the Echo understands that Townsend is not on Jurgen Klopp's list of summer targets.
Klopp is looking to bolster his attacking options before the start of the 2016/17 season but Townsend won't be among the new arrivals.
The Reds boss is keen on securing the services of Southampton's Sadio Mane, who would command a fee of around £30million.
Klopp has been a big admirer of the Senegal international since his time at Red Bull Salzburg. But any progress on that front is unlikely to happen until Saints appoint a new manager.
Manchester United and Tottenham are also keen on Mane, who came close to joining Liverpool before he signed for Southampton two years ago.