Carroll joined West Ham on a season-long loan in August with hopes of proving his worth to the Reds after a disappointing start to his career at Anfield. Hammers co-owner David Sullivan confirmed reports about a deal being in place, saying:
I am often asked about Andy Carroll's deal. It is a season-long loan. Liverpool had an option to take him back in January, but he has been injured.
West Ham have an agreement with Liverpool to sign him at the end of the season, but we have no agreement with the player.
With that club agreement made official, it makes the remaining portion of the season crucial for Carroll if he wants to make a return to Liverpool. The Reds clearly aren't convinced he will play any part in their long-term plans.
The 24-year-old England international recently made his return from an extended injury absence, entering as a substitute in West Ham's midweek loss to Fulham. A knee issue had kept him out since late November.
What will happen with Carroll after the season?
Carroll has found the net just once in 11 appearances for the Hammers. It continues the trend of him being unable to rediscover the form that made him such a popular transfer target while he was starring for Newcastle United.
He scored 11 goals in 58 matches across all competitions for Liverpool, well off the pace they were expecting after spending £35 million on him. Now, it appears the Reds are ready to chalk it up as a loss and let him go.
Things could always change between now and season's end, especially if Carroll can stay healthy and have a strong finish to the campaign. But the arrival of Daniel Sturridge to Liverpool in January shows the Reds aren't counting on him returning.
As it stands now, the first step toward Carroll staying with West Ham is complete. The rest will be decided closer to the offseason.