Plans for the redevelopment of Anfield football ground as well as the neighbouring streets will be drawn up by Liverpool City Council, Liverpool FC and Your Housing Group after the club confirmed it would not be moving to a new stadium.
The partners will work on a new blueprint for the wider regeneration of Anfield, encompassing new housing, an expanded stadium, investment in Stanley Park and regeneration of Walton Breck Road.
The news follows a commitment from the public sector to fund non-stadium parts of the plan.
Ian Ayre, managing director of Liverpool FC, said: "We are delighted that the council has managed to secure public sector funding that will fuel their regeneration plan for Anfield and surrounding area.
"We believe the regeneration plan will make a significant positive difference to the neighbourhood while creating a better life for those that live, work or visit the area.
"We are looking forward to working with the Council and Your Housing to explore the detailed feasibility of expanding Anfield stadium in a way that is supportive of the Council's Regeneration Plan and is for the community and public benefit.
"Any final decision about extending Anfield will be dependent on two main factors – firstly that the community and home owners are supportive of the proposed stadium expansion and secondly our ability to navigate the complex planning landscape.
"Anfield is a great place to play football and the Club has some of the best fans in the world. We celebrated our 120th anniversary earlier this year and hopefully this new Partnership with the Council and Your Housing will help us continue to play at our spiritual home for the next 120 years."
Your Housing Group is part of Arena. In July the Homes & Communities Agency said it would fund refurbishment of 370 properties previously set for demolition under the Housing Market Renewal Initiative in Anfield. A further 224 houses, 116 of which are vacant, will be demolished.
Mayor Cllr Joe Anderson said: "These are exciting times for Anfield, which is an area that for too long has been let down and neglected. Earlier this year we announced ambitious plans to rejuvenate housing in the area, and we are already making good progress on that front.
"Liverpool FC's announcement that their preference is to expand its stadium provides further certainty for the community, adds increased momentum to the work which is already going on and paves the way towards a new blueprint for the area.
"We have had numerous constructive discussions with the Club and have listened to their vision for the future and explored how that could tie in with and complement our own plans for the future of Anfield."