The Frenchman, who has been out of work for three years, has held talks with Villa owner Randy Lerner about succeeding Martin O'Neill.
Houllier has jumped to the top of Villa's wish list after the club's decision makers began their round of interviews this week.
Top of the pile: Gerard Houllier is set for a return to England
Alan Curbishley, Sven Goran Eriksson and caretaker boss Kevin MacDonald have all been interviewed following the club's 1-0 victory over Everton last Sunday.
However, the former Liverpool boss is now the hot favourite to take over at Villa Park as the club tries to move swiftly following an uncertain three weeks in the wake of O'Neill's sudden exit.
It is as yet unknown in what capacity the Frenchman will return.
Interview technique: Alan Curbishley (left) and Sven Goran Eriksson were approached by Villa
Lerner and his chief executive Paul Faulkner were mindful that several of O'Neill's staff followed the Irishman out of the exit when he decided to call time on his four year stay at the Birmingham club.
O'Neill's staff - including assistant John Robertson, coach SteveWalford and chief scout Ian Storey-Moore - all quit at the same time,leaving Villa with a huge gap to fill just five days before the startof a new campaign in the Barclays Premier League.
Houlliercould be employed either as a manager in his own right or as a directorof football with the brief to oversee a major overhaul of the club'sscouting and recruitment policy.
Out of the running: Caretaker boss Kevin MacDonald (left) and Everton boss David Moyes were tipped for the post earlier this week
That area has been sadly lacking in the view of many connected with Villa and Houllier's work with the acclaimed French academy at Clairefontaine would doubtless prove invaluable as the club seeks to move forward.
Finest hour: Houllier masteminded Liverpool's UEFA Cup win in 2001
Houllier, now 62, has struggled with his health in previous years, suffering a heart attack while in the dugout at Anfield during his six year stay at the club.
He left Liverpool in 2004 after first assuming control with Roy Evans as part of a dream team that was put together to thrust the Reds back towards the top of English football.
Houllier's joint managership lasted just four months and he oversaw a complete overhaul of their squad after his first season at the club signing seven new players and letting 10 go.
Paul Ince and Jason McAteer were victims of the new regime and Steve McManaman left when his contract expired, so the Frenchman has no fear of radical change.
Houllier spent more than £100 million during his time on Merseyside but his finest moment came in 2001 when he landed a cup treble of the Worthington Cup, FA Cup and UEFA Cup in the same season.
Although there are funds available to spend at Villa Park, the transfer window has now closed but at least the lure of a recognised top name will satisfy Villa's supporters as the club's shortlist was resoundingly shy of star quality following O'Neill's walk out. After Premier League 25-man squads announced, we introduce the top-flight kids from . Fame!MacDonald braced for topsy-turvy life after declaring interest in Villa postASTON VILLA FC