Atletico Madrid announced on Tuesday evening that negotiations with Liverpool over a fee for the striker Torres had reached a satisfactory conclusion.
The Spanish international was on Merseyside on Tuesday and passed a medical before flying back to Madrid, where he will hold a media conference to say goodbye to Atletico fans in the morning.
An Atletico statement read: "Atletico Madrid has reached an agreement with Liverpool for the transfer of Fernando Torres to the British club.
"The player will give a press conference on Wednesday, July 4 at 10am at the Vicente Calderon. He will be accompanied by (Atletico president) Enrique Cerezo and Jesus Garcia Pitarch."
The 23-year-old will then return to Liverpool where he will be unveiled as boss Rafael Benitez's prized summer capture for a fee thought to be £26.5million.
Torres has cut short his holiday to complete the deal, which will see him sign a six-year contract worth £90,000 a week.
The arrival of Torres will probably trigger the sale of one of Liverpool's strikers, although it is not going to be Peter Crouch, despite interest from Manchester City.
Benitez has already sold Luis Garcia to Atletico Madrid for £4million, a deal confirmed today by both clubs, and will also want to sort out the future of Djibril Cisse who is a £6million target of Marseille, where he has been on loan for a season.
The other departure is set to be Craig Bellamy, with West Ham or Manchester City his likely destination.
Crouch's future has become a point of interest with Manchester City's likely new boss Sven-Goran Eriksson seemingly keen to sign the lanky striker.
Eriksson is on the brink of being confirmed as City's boss this week, with new owner Thaksin Shinawatra on the point of purchasing the 75% of shares he needs to de-list the club from the Stock Exchange. Only then will he confirm Eriksson as manager.
But claims that Crouch is concerned over his contract, with two years left to run, have been denied by Liverpool chief executive Rick Parry.
The England striker's Anfield future was cast in doubt at the weekend when it was reported he was the only Liverpool player with two years remaining on his contract who has not been invited to open talks about a new deal.
Parry said: "It is not true that he is the only player not to have been approached about a new deal and he is very much part of Rafa Benitez's future plans."
But with Torres now joining Crouch, Dirk Kuyt, Andriy Voronin and Bellamy on Liverpool's striking list, one forward is likely to make way and Bellamy is the favourite.
Benitez needs the funds from such transfers to help finance the massive outlay for Torres, and Luis Garcia was also sacrificed.
The midfielder was unveiled in Madrid today and said: "It was a difficult decision because it hurts to be leaving one of the most important clubs in the world, and a club with one of the best sets of fans.
"I have enjoyed three great years there. There are several different reasons and the decision took a lot of thought, but Liverpool will always be with me because they always treated me very well.
"I have been lucky to win things there, but I did not want to let the opportunity pass to win trophies in Spain."
The likelihood of Gabriel Heinze joining Torres at Anfield seems to have receded.
It is believed that Manchester United would not be happy selling the Argentinean full-back to one of their biggest rivals.
There have been no direct transfers between the clubs since 1964 when Phil Chisnall moved from United to Liverpool.
Heinze, currently playing for his country in the Copa America, and his advisors are believed to be interested but that will not impress his Old Trafford employers.