EVERTON are preparing to outbid Premiership rivals Birmingham in the race to land David Dunn.

Toffees manager David Moyes has made the Rovers midfielder his number one transfer target for the summer.

Birmingham had a £5.5 million offer rejected last week after it was revealed the deal was split into a £3 million down payment, followed by two £1.25 million installments if the Blues stayed in the Premiership.

I understand Everton, who Rovers pipped to a UEFA Cup spot on the final day of the season, are ready to table an improved bid to tempt Dunn away from his home town club following ongoing disputes with manager Graeme Souness.

If the 23-year-old does move on, it could open the door for Millwall's highly-rated midfielder Tim Cahill.

Cahill, 23, has admitted he would prefer to stay at the New Den but is ready for a new challenge in the top flight following links with Rovers and Aston Villa.

"Hopefully I'll stay at Millwall, but it's whether someone comes in and nicks me and I get a move to a Premiership club," he said.

"I do want to play in the Premiership, like every footballer, and the sooner the better."

Meanwhile, Millwall chairman Theo Paphitis expects Rovers to up their £2m bid for Steven Reid to a "realistic" level during the coming weeks.

Souness made his initial offer for the Republic of Ireland midfielder at the end of last week.

Paphitis rejected the approach but has encouraged Rovers to try again.

"I'm sure Graeme Souness will be making a realistic bid for Reid in the not-too-distant future," he said.

"If he does, we will then discuss how that money can improve the squad. If it does not allow us to do that, there is no point in going on.

"We are very realistic. Reid has been fantastic for us, but if he really wants to go we would be unlikely to stand in his way."