Kenny Dalglish has been told he can splash the cash this month by the Liverpool board.
The Anfield legend is only in caretaker charge until the end of the season and there were concerns he would not be allowed to strengthen the squad.
But, after holding talks with owner John W Henry and chairman Tom Werner, Dalglish has been given the green light to bring in new faces.
“They are good people and we had a positive meeting with John and Tom. We discussed many things, one was obviously transfers,” said the Scot.
"There is no problem with transfers as long as we are responsible. We can go and look for players and try to sign them and bring them in.
"Any time I have been in a transfer market it has been responsible so I will continue to do that and try to spend the club's money as diligently as my own."
Liverpool has been heavily linked with a big-money swoop for Luis Suarez but Dalglish refused to confirm the club's interest in the Ajax striker.
"We are not going to give names or talk about sums of money," added the 59-year-old.
"We don't intend to mislead people but we have a huge responsibility to do our business in a way that has been done since I've known the club and that is in private."