Anderson, who grew up in Melton, has signed a three-year deal with the City Ground club worth £250,000 after Liverpool agreed to sell the midfielder.

The move was confirmed after he passed a medical this morning and marks a swift return to Nottingham for the 21-year-old who has been handed the prized number seven shirt by manager Billy Davies.

The former Melton Foxes player enjoyed a successful last season on loan at Forest despite picking up three separate injuries during his stint.

It marks the end of a three-and-a-half-year association with the Merseyside giants for Anderson who joined them as a 17-year-old from Hull City in January 2006.

While not having made his dream debut for Liverpool, he was highly-rated by manager Rafa Benitez who gave him his first team squad number within months of his move to Anfield.

The former John Ferneley School pupil was picked as a substitute for two Champions League matches against Benfica at Anfield and Galatassaray in Istanbul, but missed out both times.

He became a regular in Liverpool's reserves in his first two seasons and helped their youth team to win the FA Youth Cup, capping it with a man-of-the-match award in the first leg of the final which Liverpool won 3-0.

He was sent on loan to League One outfit Swansea City for the 2007/08 season, winning the Young Player of the Year award as the Swans clinched promotion and the title.