The Colombia international, reports O Jogo, will join the Reds for a fee of €45m up front plus a further €15m in bonuses.
The Reds had matched the proposal of Tottenham, but the will of Diaz was decisive.
The attacker was determined to only leave Porto for a Champions League regular and this swung the deal in Liverpool's favour, despite the presence of Antonio Conte at Spurs.
Negotiations will continue today over whether Diaz immediately moves to Liverpool or spends the remainder of the season on-loan with Porto before going to England in June.
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