John Terry is not normally scared of anything, with the possible exception of his mother making any more shopping trips, so it is a mark of his respect for Steven Gerrard and Liverpool when he acknowledges that Wednesday's Champions League visit to Anfield is a daunting prospect.

"Gerrard is definitely one of the best players in the world, that's for sure, and he's in great form at the minute," the Chelsea and England captain said. "To be honest I'm dreading going there to play him because he is different class. Liverpool have got a great backbone with [José] Reina, [Jamie] Carragher, Stevie G and [Fernando] Torres. What a spine that is, but Stevie is the heartbeat of the team, similar to the way Frank Lampard is with Chelsea. It's going to be a big clash but we're thoroughly looking forward to it."

This is a fixture becoming as much of a Champions League tradition as the familiarly naff theme music or Sir Alex Ferguson moaning about the way the following weekend's games never do Manchester United any favours, yet it is a meeting between fierce rivals that has altered subtly in the past season or two. More people are looking forward to it now, there is less talk of anti-football or malodorous matter on the end of a stick. Chelsea's renewed confidence under Guus Hiddink has something to do with that but Terry is right to suggest the Liverpool revival, with Gerrard at its heart, has been the one that has made everyone re-evaluate their assumptions about where the season's prizes will end up.

Liverpool have stopped grinding out results and started being both entertaining and devastatingly effective, scoring four goals to blow away Real Madrid and Manchester United and coming off the field after a 5-0 victory over Aston Villa to find their manager disappointed they had not scored more. Gerrard has emerged from nowhere to take over the running as player of the year and is increasingly being mentioned in high places as the world's best footballer. Zinedine Zidane is one person who thinks so, even if Rafa Benítez, as he congratulated himself on following his own contract extension with one tying his captain to the club for the foreseeable future, was more circumspect. Just because Liverpool are playing with new abandon does not mean Benítez is about to throw caution to the wind.

"He is one of the best players in the world, that's all you can say," the Liverpool manager argued. "There are different teams and different positions and you should never say one man is the best, but Stevie is happy at the moment because the team is balanced and he is playing in a position he enjoys, and I am happy because we wanted to be sure we could keep him as captain for a long time. I think we might have found his most effective position, but that's not to say he will always play there. Because he's such a good player we can use him somewhere else if we ever need to."

Benítez would say that, wouldn't he? When you find the Chelsea manager singing from almost exactly the same hymn sheet, though, you begin to realise that Gerrard is not just a Liverpool phenomenon but a player of global renown. In his capacity as coach of Russia Hiddink was asked to evaluate players he had encountered in the European Championship and he put Gerrard at the top of the list, despite England's non-qualification. "I'm not saying Cristiano Ronaldo is not good, he has his efficiency and his style of play which is very attractive, but I had to make a choice at that moment and chose Gerrard," the part-time Chelsea manager said. "Gerrard is a team player and on top of that he is very determined and decisive. It's not just him though. Liverpool now have a very balanced team and Gerrard has some skilful players around him. Gerrard is one of a few players – I could name John Terry and Frank Lampard too – who are becoming legends while they are still playing. Most only become legends when they stop but those three are terrific examples for English football."

At this rate the only thing that will prevent Gerrard scooping all the individual awards, enlarging his medal collection and stopping more traffic than President Obama might be praise going to his head and causing him to overbalance. That might be why the Liverpool captain has already evolved his own coping strategy. He simply diverts most of the credit towards Torres.

A few seasons ago, when Gerrard wondered whether Liverpool were the club to fulfil his ambitions, the midfielder frequently said he wanted to be playing along side other world-class footballers. His wish would appear to have been granted. "The key to our team, and the reason why we have suddenly come back to form again, is the fitness of Fernando Torres," he said. "He gives a big lift to everyone in the team. He runs in behind and stretches opponents and you can see the confidence rise in other players in the side when he's fit. If we can keep him right to the end of the season it's going to be an exciting finish. We've got nothing to lose. Manchester United are the favourites in both competitions but we believe we can win something. We've got to believe that after our recent results."

Gerrard is honest enough to confess he was surprised at how quickly Liverpool came back into contention in the title race. "We were surprised at United losing two games on the spin," he said with a suggestion of false modesty, given that Liverpool were responsible for the first and United were clearly still traumatised when they travelled to Fulham.

"You don't expect that, with the quality they've got and the unbeaten run they were on. But we've got a final chance now and we all want to take it. Confidence is very high at the club and it's important to keep that momentum going, especially as it has come at just the right time for the Champions League. Chelsea know that they are in for two tough games, but so do Liverpool. They are two very strong teams and the games tend to be decided by very small details. It seems for us to win a cup we always have to knock Chelsea out, but we can do that if we perform to our maximum levels.

"I wasn't exactly disappointed to draw Chelsea again. I'd be a liar if I said I wasn't hoping to get someone else but you get what you're given. To win this tournament you have to knock the best teams out, and Chelsea count as one of those. When we won it we had to knock top teams out on the way, that's the nature of the competition. We feel we have made progress this season, and in the league especially it has been a long time coming. There have been seasons when we have been miles behind Chelsea and United, and that's not good enough for Liverpool. Now we are here, it is important to keep up the pressure until the end."

Liverpool were undone in the first leg last season by a late own-goal that made their task at Stamford Bridge more difficult and had the effect of deflating the players. "We were much the better team but conceding so late cost us," Benítez said. "Clearly we will be trying not to concede this time, but it is just as important to be offensive in the first leg. That is how we have been winning our recent games." He can say that again. Torres and Gerrard may have taken a while to gel this season, but at their best they are close to unplayable. Terry and the Chelsea defence have been watching: they know exactly what is coming their way.