"Liverpool" formed part of the 7th Cruiser Squadron, becoming one of nine cruisers that could be fielded by the Mediterranean Fleet shortly after Fascist Italy entered the war. She first encountered Italian vessels off the coast of Libya on 12 June while shelling positions near Tobruk with "Gloucester" and four destroyers. The cruisers attacked five vessels, including the obsolete armoured cruiser , and sank the minesweeper . On 28 June, a British Short Sunderland patrol aircraft detected three Italian destroyers west of Zante. The 7th Cruiser Squadron was at sea in support of convoy Operation MA.3 when it altered course to engage the destroyers. "Liverpool" sighted them south-west of Cape Matapan at 18:30 and opened fire three minutes later. The ensuing action, carried out at a minimum range of about , resulted in the destruction of the Italian "Espero" The two surviving destroyers reached Benghazi with their supplies. "Liverpool" took light damage in the engagement. Ammunition had been rapidly depleted by the cruiser squadron. By the close of the action, "Liverpool"s crew had almost expended the contents of her shellrooms, reporting that each gun had 40 shells remaining. The Admiralty criticised the squadron's expenditure of some 5,000 rounds, which Admiral Andrew Cunningham, commander-in-chief of the Mediterranean Fleet, attributed to its inexperience and his insistence on confronting the Italian warships before nightfall. Nevertheless, the use of such a large volume of shells caused the cancellation of MA.3, which had encompassed two convoys from the besieged island of Malta.