The Anfield playing legend was at the club's Melwood training complex on Friday morning to start his new job.

Lee, 49, returns to the Reds after being sacked as Bolton Wanderers manager earlier in the season.

He has been appointed by Reds manager Rafael Benitez following the departure earlier this month of first-team coach Alex Miller to take up a management job in Japan.

keep improving

"I've been away for a while but everyone knows what this club means to me and it's a great pleasure to be back," he said.

"When a club the size of Liverpool comes in for you and when a manager of the magnitude of Rafael Benitez wants you then you can't say no. When I found out they were interested in me I was really thrilled.

"I think the club has made great progress over the last few years and they were so close to having a great season this time around. Hopefully we can keep improving and get to where we all want."

As a player Lee won the title, the League Cup and European Cup during the 1980s before taking on a role as reserve coach and then first-team coach at the club under Graeme Souness and Gerard Houllier, respectively. He effectively replaces Pako Ayesteran, who left the club at the beginning of the 2007/08 season.