The five remaining British sides in the Champions League received mixed fortunes in the draw for the last-16 knockout stage.

Liverpool, last year's losing finalists, received the toughest draw after being paired with Inter Milan, the current Serie A leaders, while Arsenal face Inter's city rivals, AC Milan, who are the trophy holders.

Manchester United travel to Lyons, the French league champions, while Chelsea appear to have the easiest tie having been paired with Olympiacos, of Greece.

Celtic, the Scottish champions, will face Barcelona, the five-times winners of the tournament.

Rick Parry, the Liverpool chief executive, remained confident after being handed a daunting tie against Inter Milan, the Italian champions. "It's a big one but was it going to be whoever we had drawn," he said. "It's a long time since we played them, they are a very good team. It's going to be tough but there are no easy ones at this stage.

"Every team at this stage is a good team, if you look at who we could have drawn it was never going to be easy so we shall take who we get. We've stopped a few hearts the way we have qualified but in the last three games we are clearly in form and scoring goals."

Arsenal paid the price for finishing second in their group as they take on AC MIlan, the defending champions. Keith Edelman, Arsenal's managing director, said: "It's going to be a great match, very exciting. We've only played them once in a competitive match in 1994, we drew at Highbury and lost at Milan so we can hopefully turn that round.

"We would have preferred an easier one at this stage but everyone will be looking forward to this tremendously. Arsene [Wenger] has built a strong squad so we are confident."

Peter Lawwell, Celtic's chief executive, has described his side's clash with Spanish giants Barcelona as a "formidable task". The two sides have met twice in the last four years in both the Champions League and Uefa Cup. "It's a fantastic tie and a formidable task," Lawwell said. "We are looking forward to welcoming them back to Celtic Park, it'll be another fantastic night.

"There is a friendship from those times [the previous meetings], a great connection and we are looking forward to seeing them again. This is where Celtic should be - welcoming the best and hopefully competing against the best.

"Any team we could have got we would still have been the underdogs, but we relish being the underdogs. It will be a fantastic night for the club and our supporters. Our record against Barcelona has been good and let's hope we can continue that."

First-leg ties take place on February 19 and 20, with the return fixtures on March 4 and 5 .

Champions League draw in full

Celtic v Barcelona

Lyons v Manchester United

Schalke 04 v Porto

Liverpool v Inter Milan

Roma v Real Madrid

Arsenal v AC Milan

Olympiacos v Chelsea

Fenerbahce v Seville