Walsh, who won the league with Liverpool in 1986, has predicted that it may go down to goal difference and thinks their clash with Jose Mourinho's side at Anfield on 27 April could well decide where the trophy ends up.
"Liverpool have been beating teams for fun, scoring lots of goals. They're neck and neck on goal difference with Chelsea and Man City and it may come down to that," Walsh told Sky Sports News.
"It's an amazing story what is happening at Liverpool. It's a reality for them now - they've got to believe they can beat Chelsea and Man City and do it."
But Cascarino, who was a player at Stamford Bridge between 1992 and 1994, has said it is not over for Chelsea despite their defeat to Crystal Palace on Saturday.
"This wasn't the weekend where Chelsea lost the title - they just lost to a better side," the former Republic of Ireland international said.
"Their lack of ability to get back into the game is a concern but I think they're better suited to play teams like Liverpool and I fancy them against the rest of the teams they've got to play."
Both tipped Manchester City to finish as runners-up after they were held to a point by fourth-placed Arsenal at the Emirates on Saturday - a result which Walsh said was not good for either side.
"City needed three points and Arsenal are clinging onto fourth," said Walsh. "Arsenal didn't want to give Everton too much encouragement ahead of the game next week and they'll be looking over their shoulders at them now."
And Cascarino added: "Man City have got some tricky games ahead and after we saw Palace get something from Chelsea, I think they could do the same to City.
"Arsenal could get beaten by Everton too. Everton's full-backs are much better than Arsenal's and they will make it difficult."