Mario Balotelli's agent Mino Raiola has revealed that the striker will not be leaving Anfield this summer.
Graham Dorrans has signed a two-year deal with Norwich City following a successful loan spell with the club.
The 21-year-old left-back, who initially arrived at the Ricoh Arena in mid-November, completed his latest loan stint from Sunderland with Wednesday's hard-fought 1-0 win over league leaders Tranmere.
But Sky Blues boss Mark Robins has been working hard to strike an agreement with the Black Cats and that finally came to fruition on Thursday afternoon.
Robins said: "I am delighted to secure a player of Blair's potential for Coventry City football club.
"He has proven capable of playing at a consistent level and he will, I am sure, be an asset to us.
"He also has the personal qualities I am looking for in players I recruit. He is professional and determined to succeed and we welcome him to Coventry City on a permanent contract."