It took Liverpool just nine minutes to take the lead, Michael Owen fired in a superb shot but Paddy Kenny saved well before Senegal International El Hadj Diouf fired home off the post and into bottom right hand corner after Emile Heskey laid off the setup.
With the game tied 2-2 on aggregate after ninety minutes the game went into extra-time where Liverpool scored the winner through England International striker Michael Owen. Steven Gerrard put Owen through one-on-one with the keeper and Owen cool and collected slot past Kenny to put the Reds 2-0 up.
United did have their chances, Wayne 'The Chief' Allison headed over from close range but it was the Blades who paid the price when Diouf put them in front.
The Blades were in defense mode and Liverpool where still on the attack, El Hadj Diouf almost made it two but his donkey shot smashed against the cross bar, United continued to defend.
United almost equalised moments later when Wayne Quinn put in a cross but Phil Jagielka's header went agonizingly wide as it fired straight past the post. The Blades where then forced into a early
substitution when Nick Montgomery had to be stretched off, Tommy Mooney took his place.
After a very unimpressive performance by United in the first half but in the second they improved and again almost got a leveler when keeper Chris Kirkland was forced to tip over a Michael Brown free-kick out for a corner.
Liverpool coped with Blades pressure and Steven Gerrard thought he had made it two when he fired at Kenny but left-back Wayne Quinn blocked the shot and dragged it out for a corner.
Midfielder Danny Murphy headed wide before Chris Kirkland should have been sent off. United crossed into the box where Kirkland caught and Allison did just enough to put him off and drop the ball, however the ball went out of the 18 yard area when Kirkland re-picked up the ball.
A free-kick was given but Kirkland escaped with a Yellow card when Alan Wiley should have waved a red card (referees can send off Luton goalkeepers but not Liverpool ones!). From the resulting free-kick Tommy Mooney almost scored but it was the Reds wall that stopped him from doing so.
The game went into extra time where United had to score, otherwise Liverpool would have gone through on away goals unless the Reds got another goal. Unfortunate for the Blades Pool got there goal on 107 minutes when Gerrard put Owen through one-on-one when he finished.
~ Full-Time: Liverpool 2-0 Sheffield (aet) ~
Man of the Match: Paddy Kenny