After initial talks with the Reds money men, Hodgson is said to have been told money is tight and he should not expect to receive the £40million transfer war-chest that has been reported in the media recently.
The former Fulham boss has already identified his strikers as an area of concern, with few options behind injury-prone star man Fernando Torres.
Apart from the largely underwheming David Ngog and new signing Milan Jovanovic, the Reds have only a few youngsters on their books with little or no first-team experience.
As a result, Hodgson is hoping to bring in an experienced head who can add something different in attack - and believes Beattie fits the bill.
The powerful target man, 32, played under Hodgson at Blackburn Rovers in the late 1990s after coming through the club's youth system.
And Hodgson highly rates the player, believing he will also represent value for money this summer because of his age and his well-publicised bust-up with Stoke City manager Tony Pulis last season.
Beattie is not seen as a long-term option, but the new Reds manager is thought to be prepared to risk the ire of the Anfield faithful by signing a player he believes will have an instant impact on the squad.
The Potters are thought to be keen to cash in on the striker, especially after reports Pulis has left the £3million signing out of his side's pre-season tour of Austria.
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