For much of the summer, Barry looked set to join the Merseysiders but has recently confirmed he will not be moving anywhere during the current transfer window.

Now he is set to line up against the Anfield club in Sunday's Barclays Premier League match.

Barry took another step nearer to regaining full sharpness and fitness by playing 90 minutes at left-back in last night's UEFA Cup match with Icelandic part-timers Hafnarfjordur at Villa Park.

He was keen to join the Reds and secure Champions League football only for the deal to collapse after Liverpool failed to meet Villa's £18million valuation of the 27-year-old.

Now Barry will look to help Villa come out on top and lay down a marker for their ambitions to qualify for a Champions League place.

O'Neill said: "I am delighted Gareth is staying. It is a situation that three weeks ago I couldn't have envisaged.

"In my mind I thought he would go. It is great that it didn't materialise, a big lift for us all.

"You know the old cliche, 'it's like having a new player', and actually in many aspects it is like that. I really am ecstatic and so are the dressing room.

"Gareth has a pretty good chance of starting on Sunday. I would say there was a pretty good chance of that happening."

O'Neill would dearly like to help Villa achieve a decent UEFA Cup run, in a competition in which he reached the final during his time with Celtic.

But he is aware of the need to bring in another couple of players to bolster the squad for what could be a lengthy campaign.

He said: "It would be great if we can sustain the progress in the Premier League. That is naturally so important but why not have a crack in Europe?

"If we can, between now and Monday evening, get a couple of people in, which we have been trying furiously to do, then it would give us all a lift and maybe sustain us for the months ahead.

"Generally speaking we are trying to strengthen our side. We are really battling to achieve that."