The Premier League duo were the last pair out in yesterday’s quarter-final draw in Nyon, which also saw holders Real Madrid handed a tie with Juventus, last season’s beaten finalists who knocked out Tottenham this term.
La Liga leaders Barcelona were drawn to face Roma while Sevilla’s reward for victory over Manchester United was a clash with German giants Bayern Munich.
Anfield will stage the first leg of the all-English quarter-final on 4 April, with the second leg to be played on 10 April at the Etihad Stadium.
Liverpool and City have already played each other twice in the English top flight this season. City strolled to a 5-0 home win in September, with Gabriel Jesus and Leroy Sane both scoring twice after Sadio Mane had been sent off.
Liverpool gained revenge at Anfield in January when they inflicted what so far has been the only Premier League defeat for leaders City, who were beaten 4-3 and needed two late goals to add respectability to the final scoreline.
Manchester City director of football Txiki Begiristain was in Switzerland for the draw, and afterwards admitted the tie was “a very difficult one”.
Klopp took questions on the European fixture as he spoke ahead of today’s Premier League home game against Watford. The German said: “I think it is an absolute dream draw – for all Manchester United fans. I really don’t mind.
“I knew it would be difficult and that is difficult. The good news is for Manchester City it will be difficult as well. I saw Txiki Begiristain’s face after the draw – and it didn’t look like it was Christmas and Easter on the same day.”
Pep Guardiola’s City side secured their place in the last eight by beating Basel 5-2 on aggregate, winning the away leg 4-0 but surprisingly then losing 2-1 in Manchester.
Liverpool saw off Porto in the last 16 with an impressive 5-0 win at the Estadio do Dragao and a goalless draw at Anfield.
Begiristain hinted an all-English tie had taken the shine off City’s quarter-final draw.
“We like to travel and to go to another country in the Champions League but it is what it is,” Begiristain said on City’s website. “We know each other very well, they are a very offensive team, the truth is it is going to be a great couple of games and we are going to see good football.
“We are doing well in the league but is the same as always, you have to be right, in the Champions League there is no time for mistakes, everything has to work, you have to be almost perfect in both games. We know the power and the strength of Liverpool – in the league they beat us, we beat them at home.”
In a rematch of last season’s final, Real Madrid face Juventus with the first leg in Turin on 3 April.
Having beaten the Italian champions 4-1 in the 2017 final in Cardiff, Madrid will likely start favourites as they pursue a record-extending 13th European title and a first hat-trick since Bayern won their third title in a row in 1976.
Cristiano Ronaldo, pictured, has already netted 12 goals in the competition this season for Real – more than the entire Juventus team, which has scored just 11 times in eight games.
Still, Juventus did in the last 16 what Real could not do in the group stage – beat Tottenham – as they advanced with an impressive 2-1 second-leg win at Wembley.
“It says a lot about the winning mentality (of Juventus), and their personality and experience to play these kind of matches,” Real director Emilio Butragueno said.
The final is on 26 May at the Olympic Stadium in Kiev, Ukraine.