The 29-year-old, who is a Liverpool fan and rose through the club's youth ranks, is set to make the switch across Merseyside on a season-long loan deal with an option to buy.
Coady was left on the bench for the Premier League opener at Leeds on Saturday as Bruno Lage moved to a back four and favoured Nathan Collins and Max Kilman at centre-back.
As a result, Coady has been keen for a move for game time to ensure he makes the England squad for the upcoming World Cup in November. The player has driven this move due to a desperation to play, which has been the catalyst for Wolves agreeing to a swift departure.
The Express & Star reported on Thursday that Wolves could let Coady depart as a gesture of good will for a player who has spent seven successful years at the club.
Now, that move is coming to fruition and the parties involved are working to finalise the deal, which could be officially announced tomorrow (Monday).
When asked if he had spoken to Coady about being left out of the starting XI at Leeds, Lage said: “I talked with him since the first day I was here.
“He is one of the best people I have met in football. He’s our captain and our leader and I chose the best XI to win this game and the team did a good performance.
“What is important after this game is in my opinion the team can play in two systems and in my opinion Coady can play in a line of four.
“There is no doubt about that. He’s a great professional and he wants to improve the way his team-mates want to improve to play in a line of four.
“So there’s no doubt in that."