The City manager took in their victory against PSV Eindhoven in the Champions League in midweek and was impressed by what he saw.

Hughes enjoyed European success himself last night when a place in the group stages of the UEFA Cup was achieved following a 4-2 aggregate win over AC Omonia.

However he claims his team will need to raise their game when they face Liverpool at home on Sunday after they took their time to dismantle the Cyprus side.

Hughes said: "Liverpool have been a top four side for a number of years now. They have a huge history of winning trophies.

"I sense that this season they will have a real go at trying to win the Premier League.

"Liverpool have had a great start. They look confident, strong and assured. They will run the top teams very close.

"It is a big test for us as they are playing exceptionally well at the moment.

"Hopefully we will be in a position to cause them problems as we have have some good players in key areas of the park."

Hughes is pleased with the way his team his playing - especially the Brazilian influence after Jo scored twice in the first leg in Nicosia.

Elano broke the deadlock in the second half at Eastlands after being set up by Robinho.

Shaun Wright-Phillips then added a second before substitute Rasheed Alabi got a late consolation for the visitors.

Hughes said: "When you have a quality player like Robinho you know he can get the ball under control very quickly.

"They trust him in possession and that allows players like Elano to be more progressive and venture further forward.

"We are still working on patterns of play and situations we can exploit in games. But it is coming.

"We benefit every time we win games because that helps the confidence in the team."

The draw for the group stages takes place on Tuesday with City assured of another four games in the competition. The top three sides then advance to the round of 32.

Hughes is excited at the prospect even though there is strong opposition in the competition.

He said: "We want to be in Europe and are pleased to be through. We have number of games now and are looking forward to that.

"We could do with a decent draw but the clubs are strong. We will wait to see who comes out of the hat and plan accordingly."