Argentina international Mascherano, who has been embroiled in controversy since he arrived in England with Carlos Tevez last year, said: "We are playing a lot better than Chelsea at the moment. All of our team are performing to the necessary level.
Javier Mascherano: pleased with Liverpool's performances so far this season
"I have seen some of Chelsea's games this season and they do not seem to have the same spark as in other years and they cannot use their injuries as an excuse.
"They have players with enormous potential and are capable of beating other teams, but there is no doubt that Liverpool are the favourites."
Mascherano might have been better off expending his energy on securing a place in Sunday's line-up.
Steve Gerrard is set to play despite a hairline fracture of the foot and Mascherano may find himself left out as Xabi Alonso fills the holding role.
Even if Gerrard survives the 90 minutes on Sunday, Liverpool have decided that he will not play for England in their Wembley friendly against Germany next week.
Chelsea manager Jose Mourinho's major concern will be the fitness of Ricardo Carvalho, who injured his hip in Wednesday's win at Reading and has pulled out of the Portugal squad for their Euro 2008 qualifier against Armenia next week.
Chelsea are awaiting scan results but he is expected to miss out on Sunday along with Michael Essien, who damaged knee ligaments after scoring against Birmingham last week.
The good news for Mourinho is that Didier Drogba, who scored his first goal of the season at Reading, is back playing painfree.
Drogba said: "We are going to be champions this season because we are going to improve on what we didn't do last year and what we were doing when we were champions twice.
"The spirit is good but when teams play Chelsea they give 150 per cent. More than us.
"We need to control games and not to be behind and then try to get a result.
"We won the title twice but last season, nothing. Okay, there was the FA Cup but you have to forget that. Every time we play we have to ask ourselves the question: are we good enough to win the title again?"
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