Mascherano have been priced out a move to Barcelona after Liverpool insisted they would not be drawn into talks with the club if the Spanish giants are not prepared to pay £35million for the Argentine.
Benitez said: “We spoke to Javier and his agent two weeks ago and told them our ideas and they told us their ideas. Javier is playing really well again. He has come back to his best and now we are happy for talks to progress.
“We have plenty of time to do the deal because he still has two more years left on his contract, but we are talking and I believe we will sit down again sooner rather than later to agree the future.
“The last conversations that we had were very positive. Talk about him leaving has all gone quiet so we are OK again.”