Potion of Life is a Quest Item for The Golden Bird quest. It can be obtained at Kurast Docks by giving Alkor The Golden Bird.
It permanently adds 20 Life when used.
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Kurast Docks is part of Kurast City. Kurast Docks is the town level and it's where the player starts Act 3. The access to the Spider Forest can be found in Kurast Docks.
Alkor is an NPC from Diablo II, Act III. He is an Alchemist, similar to Lysander in personality and wares. He has an Indian accent. Alkor’s shop is at the top of the map, where he sells various potions. He is also very fond of necromancers. Apparently, he has a number of odd potions, claiming that Asheara is a good customer as she buys a “potion of manliness” every week from him.