Flanagan played with Steven Gerrard during their days together at Anfield and the new Ibrox boss is keen on the player to strengthen his defensive corps.
The 25-year-old is on his way to join the club’s pre-season camp in Spain where he’ll undergo a medical.
He will become the seventh summer signing after deals for Scott Arfield, Allan McGregor, Ovie Ejaria, Nikola Katic, Connor Goldson and the permanent transfer of Jamie Murphy.
The defender was released by Liverpool this summer after spending eight years on the periphery of the first-team squad following his ascension from the club’s youth ranks.
He has one England cap to his name after coming on as a second half substitute in a friendly against Ecuador in June 2014.
Flanagan controversially avoided being sacked by the English Premier League side in January earlier this year after admitting to assaulting his girlfriend in Liverpool city centre. After pleading guilty he was sentenced to 40 hours of unpaid work and a 12-month community order.