Manager Rafael Benitez made three alterations to the side that began the first game, with Peter Crouch, Jermaine Pennant and Steve Finnan earning a recall, while the main change in the Chelsea lineup saw Michael Essien start in the centre of defence in place of the injured Ricardo Carvalho.
Both teams began the Anfield fixture at a slow tempo, but Steven Gerrard attempted to raise the noise inside Merseyside with a trademark effort from distance with his shot flying marginally past the post.
Challenges were flying in from both teams with Ashley Cole and Pennant involved in a personal tussle and John Obi Mikel and Javier Mascherano exchanging words, but referee Manuel Mejuto Gonzalez opted to keep his cards in his pocket on both occasions.
The visitors were struggling to retain possession of the ball and they were made to pay midway through the half when Liverpool took the lead. After Joe Cole had fouled Gerrard, the Reds skipper cleverly rolled the resulting free kick to Daniel Agger, who fired a fine effort inside the near post from outside of the penalty area to level the tie on aggregate.
© Getty Images
Since the opener, Liverpool appeared happy to sit on the back foot and invite pressure from Chelsea, but more often than not, the Reds were ready to capitalise on an error with a counter-attack. In turn, Chelsea were more conservative to avoid falling behind in the tie.
However, the Blues were struggling to contain Liverpool's second wind and after Crouch had seen his header blocked by Petr Cech, Dirk Kuyt powered a header against the woodwork as the Reds pressed for a winner in normal time.
Bolo Zenden was the next player to try to net a tie-changing goal, but after his low drive had been saved by Cech, both teams took their foot off the gas and began to settle for an extra 30 minutes.
Midway through the first period of extra time, Kuyt thought that he had given Liverpool the lead but his shot was ruled out for offside, while at the other end, Paulo Ferreira was denied a penalty after going down inside the area.
© Getty Images
The final 15 minutes saw both teams struggle to create anything significant on goal. Chelsea wasted a couple of good openings on either flank, while Kuyt saw another effort easily saved by Cech, who had kept his side in it at times during the 120 minutes.
Zenden got the penalty shootout underway with a calm spot kick past Cech, and Liverpool were soon handed the advantage when Arjen Robben saw his tame attempt kept out by Reina.
Xabi Alonso, Frank Lampard and Gerrard all netted their respective kicks, but after Geremi missed for Chelsea, Kuyt made no mistake by powering the ball past Cech to earn Liverpool a place in the final.
Liverpool's bid for a second European triumph in three years ended in failure when Filippo Inzaghi struck twice to help AC Milan to a 2-1 victory to gain revenge for their loss in Istanbul in 2005.
As for Chelsea, their Premier League campaign ended with a whimper but a goal four minutes from the end of extra time from Drogba saw them beat Manchester United 1-0 to end the season with the FA Cup.