Under the leadership of Kenny Dalglish they have shown a marked improvement in form and Alonso is confident they are now on the up.
He said: "I think they have regained their confidence and despite being knocked out of the Europa League (by Braga) their form in the Premier League has improved a lot.
"I think they can rebuild a competitive team, especially as it looks like there is now stability at the club again. Now they have to think about the sport side and create a plan for the following years."
You can read the full interview with Xabi via The Times Online