"They are world and European champions," Torres was quoted by British media as saying on Tuesday.
"We respect them totally for the class of players they have. Many of them are among the best in the world and they're clear favourites to win the title.
"But we're working hard to compete and finish above them and we're on course."
Liverpool have drawn five of their last eight league matches and champions United, who began the season slowly, will go top if they beat Wigan Athletic at home on Wednesday and Bolton Wanderers away on Saturday.
Liverpool, who hold a five-point lead over United and have played two games more than them, are not in action until Monday's Merseyside derby with Everton.
Spain striker Torres, who came third in FIFA's World Player of the Year on Monday when United's Cristiano Ronaldo took the honour, said Liverpool's visit to Old Trafford in March would be the critical point of the season.
"I think the game at Old Trafford will decide the title," Torres said. "If everything goes as we expect, we think we'll go there in a similar position to the one we are in now.
"Then it will be up to us to play our game and try to get a result in a ground that, in the past few years, has not been good for Liverpool.
"We know the chances we have. We have to go to Old Trafford and we'll play Arsenal and Chelsea at home."
The last of Liverpool's 18 league titles came in 1990 and United would equal that record should they win the league this season.
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