Williams will spend the duration of the forthcoming campaign with Michael Appleton’s Seasiders as he gains further senior experience.
Williams has progressed all the way through the ranks at Liverpool since joining as an U10, making 19 appearances for Jürgen Klopp’s first team in the past two years.
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He crucially helped the Reds secure Champions League qualification in the run-in of 2020-21, starting each of the final five Premier League games as Klopp’s charges finished third.
Last summer he signed a new long-term contract with the club and then spent time on loan with Swansea City during the season.
Williams will now link up with Appleton’s Blackpool squad as they prepare to begin the Championship campaign at home to Reading on July 30.