The Premier League's referees organisation, PGMOL, have admitted that they erred by not allowing Diaz's goal to stand as nine-man Liverpool lost for the first time this season.
Jurgen Klopp's side fell to an agonising late loss after Curtis Jones and Diogo Jota were sent off by referee Simon Hooper.
But things could have been different had Diaz's 33rd minute effort been allowed to stand at a time when Liverpool were a man down.
A statement read: “Liverpool Football Club acknowledges PGMOL’s admission of their failures last night. It is clear that the correct application of the laws of the game did not occur, resulting in sporting integrity being undermined.
“We fully accept the pressures that match officials work under but these pressures are supposed to be alleviated, not exacerbated, by the existence and implementation of VAR.
“It is therefore unsatisfactory that sufficient time was not afforded to allow the correct decision to be made and that there was no subsequent intervention.
“That such failings have already been categorised as ‘significant human error’ is also unacceptable. Any and all outcomes should be established only by the review and with full transparency.
“This is vital for the reliability of future decision making as it applies to all clubs with learnings being used to make improvements to processes in order to ensure this kind of situation cannot occur again.
“In the meantime, we will explore the range of options available, given the clear need for escalation and resolution.”
