The single will be a cover of Simon & Garfunkel's "Bridge Over Troubled Water" and will feature the One Direction singer performing alongside a variety of other British musicians.
The project is being steered by Simon Cowell, who has a long-standing relationship with One Direction since the X Factor days and asked the boys to be on the single.
A source said: "If all four (One Direction) came on board, it would be as solo acts as Liam has to record in the U.S.".
"I don't think £5 million is going to touch the sides, and I don't think it even amounts to the amount of compensation that people deserve".
Simon previously told Good Morning Britain, "I hope it will prick a few people's consciousness and it might spur someone on to do something else".
We only started 24 hours ago and already we are getting calls coming in, mainly from Brits.
Cowell also talked about what an impact the tragedy had had on him personally.
'I feel honoured to be a part of it so to be here today is really important.
"I would love to get Adele on the record, after she did what she did", he said.
"Seeing the building it made a big impact".
"You sit there and watch the news and go back and think, 'what the f*** do you do?'"
Paloma Faith blasted the Government for not doing enough to help victims. "I'm really hoping that it does well".
Hopefully this single will help add a little more to the much-needed pot.