Wenger and benitez's sides will face each other three times in a week
Arsenal will meet Liverpool in the quarter-finals of the Champions League after they were paired together in Friday's draw in Nyon, Switzerland.
Arsene Wenger's side will play the first leg at home on 1/2 April, with the return leg at Anfield on 8/9 April.
Manchester United, who beat Lyon to reach the last eight, were drawn against Real Madrid's conquerors Roma.
Chelsea, the fourth English club in the draw, face Fenerbahce, with Schalke 04 versus Barcelona the other fixture.
The winners of the Arsenal-Liverpool showdown - the first time those two will have met in European competition - will then take on Chelsea or Fenerbahce in the semi-finals, while Manchester United or Roma face Barcelona or Schalke 04.
The legs for the last-four ties will take place on 22/23 April and 29/30 April.
It means if Chelsea overcome Fenerbahce in their quarter-final, not only could they face their semi-final conquerors of 2005 and last year in Liverpool, but also that England will be guaranteed a presence in the final in Moscow on 21 May.
And with Fenerbahce and Schalke 04 appearing in the Champions League quarter-finals for the first time, and Roma having never got past this stage, English sides make up four of the top five favourites according to the bookies.
However, Liverpool chief executive Rick Parry could barely hide his disappointment at having to play the Gunners, saying: "We'd hoped to avoid an English team but an all-English tie was bound to happen and it's happened to us. At least we've avoided a trip to Turkey.
"We're also playing Arsenal in the league in between the quarter-final legs so that will be interesting. I don't think there will be any surprises for either side in those games.
"Of course, we've noticed we might also face another English side (Chelsea) in the last four as well."
Arsenal managing director Keith Edelman added: "I think we'd have preferred European competition.
"Liverpool are a great team and are fantastic in this competition and, with three games against them in a week, I'm sure the tactics in each tie will be under close scrutiny."
"It should make for compelling viewing and, after the way we played against AC Milan, we must have a lot of belief that we can go all the way."
Meanwhile, Manchester United club secretary Ken Ramsden said: "It's a good draw for us, I think. I'm happy we're playing continental opposition and we have a good record against them.
"I'm sure the manager will also be happy that we're playing at home in the second leg so we're content with that."
Chelsea chief executive Peter Kenyon was equally happy to have avoided an English side in the draw, adding: "I'm delighted.
"There are no easy draws at this stage but we wanted to avoid an English side and we've done that.
"Despite a couple of disappointing results of late, we've complete confidence in the team and coaching staff to ensure we have a good end to the season."
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