Houllier had six highly successful years at Anfield, winning half-a-dozen trophies and leaving the bulk of the side which won the UEFA Champions League in 2005.
However, things at Anfield right now look a long way from how the Frenchman left the club - but he thinks Hodgson, who was appointed in the summer, will get things right.
"I am sure he will turn it around at Liverpool," said Houllier, whose Aston Villa side travel to Merseyside on Monday evening - a match you can see live on Sky Sports HD1.
"He will do it. No problem. Give him a bit of time.
"He needs to change a few things. The problem is at Liverpool, when you lose, it's a crisis."
Houllier revealed that he is good friends with the Liverpool boss.
"Roy is a great pal of mine, he has been a good friend for a long time," he continued.
"We first met when he was coach at Malmo and I was at Paris St Germain and we had an indoor tournament.
"It has gone on from there. It was a League Managers' meeting where I saw him again - but we meet several times in a year.
"I don't think we have ever managed teams that have played against one another before."
Following his time on Merseyside, Houllier remains a firm follower of the Reds.
"There is far more pressure than here (at Villa). But the board were patient, they knew we had to reconstruct and we did. Each year you try to build," he said.
"I always think the mission of a manager is three-fold.
"The first one is to win a trophy and have silverware and win titles and so on - and we did that.
"The second one is to leave a legacy. I would just use my former chairman's words. He said 'you put the club into the 21st century' which it needed, maybe at the time.
"The legacy is the team because the team that was left with Rafa (Benitez) won the Champions League the following year.
"We also had new facilities and maybe a new style of professionalism I would say.
"I think the third mission of a manager is to make your players improve.
"We had a Ballon d'Or with Michael Owen and Steven Gerrard is a world-class
international player.
"All the players, whether it was Danny Murphy, Emile Heskey, Stephane Henchoz or Sami Hyypia, all did well, contributed and became better players."
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