"Villarreal and Atletico Madrid have reached an agreement on the transfer," Villarreal said on its official site without revealing the fee or length of the contract.

The deal follows reports that Atletico's Fernando Torres is likely to be heading to Liverpool after the Premiership side tabled a 27 million pound bid for the Spanish forward.

Forlan, who has 54 Spanish first division goals to his name, joined Villarreal in 2004 from Manchester United.