Chelsea and Manchester United are set to step up their chase to secure former Liverpool midfielder Xabi Alonso on a pre-contract agreement.

The Real Madrid star, whose contract expires at the end of the season, is attracting huge interest across Europe and reports had suggested Juventus were lining up a swap deal involving Andrea Pirlo heading to the Bernabeu.

However Madrid boss Carlo Ancelotti has ruled out letting Alonso leave in the January transfer window and believes he still has an important role to play from now until the end of the campaign.

"Xabi is a vital player for Madrid now that he's recovered from injury. There are only two players like him in Europe. One is Pirlo and the other is Xabi," he told Mediaset.

"However, we have no intention of making a player exchange deal with Juventus. There is no substance to any rumour like that.

"I am still in touch with Andrea because I have a good relationship with him. I was pleased to see the Madrid fans give him a warm welcome when we met."

StarSport revealed last week that United were leading the chase to sign Alonso, 31, on a free transfer next summer and had opened up initial discussions over a potential deal.

Alonso is yet to agree an extension to his deal and despite Ancelotti's reluctance to let him leave in January, the Spanish international will be free to discuss terms with other clubs over his next move during the final six months of his contract.

Jose Mourinho, who worked with Alonso during his three years at Madrid, is keen to link up again with the midfielder at Stamford Bridge.