(CNN) -- English Premier League giants Liverpool announced plans Monday to stay at their "spiritual home" of Anfield rather than move to a new stadium.
The north-west of England club will be working with Liverpool City Council to regenerate the area around the historic ground, which would include new housing developments.
Under the proposals, Anfield will be extended from its existing 45,000 capacity to a 60,000 all-seater stadium, enabling the club to better compete with other EPL sides such as Manchester United and Arsenal.
The team's U.S. Owners Fenway Sports Group are renowned for re-developing existing old stadiums, most notably the home of their Boston Red Sox baseball team, now named Fenway Park.
Liverpool managing director Ian Ayre said that the decision to stay at Anfield rather than move forward with previous 10-year-old proposals for a new ground at Stanley Park, had been heavily influenced by the owners and the club's 120-year history.
"I think this is the spiritual home of Liverpool Football Club," he told the club's official website.
"We've had some of the greatest triumphs in our history here, so it makes sense if there's a right solution that this is the place we should continue to play our football."
The Mayor of Liverpool, Joe Anderson, told a press conference Monday that the local authority had developed a "good, honest relationship and partnership" with Fenway Sports Group.
He announced that the council had secured a $40 million grant to regenerate the area around the stadium, with further investment likely to be achieved.
Anderson said he had visited Boston to see the Fenway Park development and meet Liverpool's owners John Henry II and Tom Werner, who took control of the club two years ago.
They replaced the previous American pair of Tom Hicks and George Gillett Jr. with widespread approval from Liverpool fans.
Ayre said the announcement was a "huge step forward" but warned that it was subject to the "right financing solution" and the UK planning process.
Liverpool dominated English football in the 1970s and 1980s, winning 11 league titles and seven trophies in European competition.
But in recent years they have played second fiddle to arch-rivals Manchester United.
Their success in the English League Cup last season was their first trophy since 2006, but was not enough for manager Kenny Dalglish, appointed by Fenway Group, to stay in his job.
Brendan Rogers took over in the summer, but has overseen a difficult start to the season with a squad weakened by injury and departures.