Former Germany and Bayern Munich captain Lothar Matthaus has insisted that Liverpool are capable of winning the Champions League this season.

The Reds are the leading scorers in this season's competition, but have been drawn against Manchester City in the quarter-finals and will need to pull off an upset against Pep Guardiola's side if they are to reach the last four.

City have dominated domestically this season, but Liverpool are the only team to have beaten them in the Premier League and Matthaus believes that manager Jurgen Klopp is capable of masterminding another victory before launching a title challenge next term.

"Maybe City has more money but I know the mentality of Klopp, I know the mentality of his team. They work very hard. Liverpool has the mentality and an atmosphere in the ground that is similar to Dortmund. He is a powerful coach. He can get people to take to him - the players and the fans. He has to find one or two more players, especially in the defence to be better in the competition," Matthaus told reporters.

"Like Guardiola in his first season he had a very good offence then he invested a lot of money in the defence, and you see the difference now - they are 15 or 16 points ahead of Man United. That is a lot. That is the reason [Guardiola] bought many players in the defence, they are much better now. City are maybe one step higher than all the other teams in England at the moment but for sure other teams will invest and find the right players.

"I know Jurgen Klopp knows exactly which player he needs. Some people were shaking their heads at £75m for a defender (Virgil van Dijk) but this £75m at the end shows the defence is a lot better. He didn't change his style too much. He is working very hard, his team is always ready to fight for 90 minutes, they are in good condition, he works very hard. He finds the right players, especially in the offence, who can make the difference on the highest level.

"Liverpool is not afraid to play against Manchester City. They showed weeks ago how you can win against Manchester City. They have a good offence, they work better in the defence and this is the key to win titles. He has done a very good job. I was believing from the beginning that he and Liverpool have a very good relationship. You can see that in the good results, the good games and he has bought the right players. For me it is a team that can win the Champions League in two months in Kiev."

Liverpool last won the Champions League in 2005, beating AC Milan on penalties in the final.