They call him 'King Kenny' in the red side of Merseyside [GALLO/GETTY]

"King Kenny" is back on the throne at Anfield – permanently.

Widely regarded as the Reds' greatest player, Kenny Dalglish signed a three-year contract as Liverpool manager on Thursday, after helping the team recover from a poor start to the season and move to the brink of European qualification.

Dalglish took over the job from Roy Hodgson in January in a caretaker capacity with Liverpool 12th in the standings and only four points above the relegation zone.

Since then Liverpool have climbed to fifth in the English Premier League going into the final two games of the season and are favourites to qualify for the Europa League.

Reward

"It's a great reward for the work that's been done, not just by me but Steve, Sammy (Lee), the players and the people on the terraces and everyone else inside the club, including the owners," Dalglish told the club's website.

"We said at the outset if we stick together and work together then it makes it easier to produce better results and I think that is the main reason why results have improved."

The club's director of football Damien Comolli said they had not looked at other options.

"Kenny turned things around very quickly, with the help of Steve Clarke," he said.

"For us, it was a no brainer.

"He hit the ground running from day one knowing what he wanted to do because he knew the boys anyway, especially the key players like Steven Gerrard and Jamie Carragher, and knew the young players in the academy."

Steve Clarke, Dalglish's first appointment, has also agreed a three-year contract as first-team coach.

Club legend

The permanent appointment of Dalglish, who won eight league titles as a player and a coach from 1977 to '90 to establish himself as a club legend, was hardly in doubt after the team's remarkable turnaround in form.

Since taking over a team lacking in confidence, Liverpool have lost just three times in the league in the last four months and catapulted up to fifth. A victory over sixth-place Tottenham at Anfield on Sunday will secure a place in the Europa League.

Dalglish joined Liverpool as a player from Scottish giants Celtic in 1977 and helped the north-west club win three European Cup trophies as well as several domestic titles.

He was appointed player-manager in 1985 and his first season in charge yielded a domestic league and FA Cup double.

Following retirement as a player, Dalglish was the last manager to guide Liverpool to the English Championship when they won the old First Division title - in the era before the Premier League - in 1990.

That gave Liverpool a record 18th English Championship - a mark arch-rivals Manchester United are on the brink of surpassing this weekend.

In all, Dalglish's first six-year spell in charge yielded three league titles and three FA Cups.

But in 1991, having struggled to cope with the emotional fall-out from the Hillsborough disaster, when 96 Liverpool fans were crushed to death during an FA Cup tie at Sheffield Wednesday's ground two years earlier, Dalglish resigned.

He guided Blackburn Rovers to the Premier League title in 1995 but spells at Newcastle United and Celtic failed to produce similar success.

Source: Agencies