Houllier is set to hand in his resignation as France's technical director on Wednesday, with the French Football Federation unlikely to stand in his way.
Related ArticlesHoullier Villa deal hits hitch over MacDonaldAston Villa ready to appoint HoullierHoullier is a big gamble for LernerHoullier in frame for Villa jobMacDonald backed for Villa roleCurbishley and Eriksson in frameHoullier will be only the second foreign coach to take charge of Villa after Jozef Venglos' ill-fated spell two decades ago.
He is set to be named as Villa's fifth manager of the new millennium after John Gregory, Graham Taylor, David O'Leary and O'Neill.
It will represent the end of a six-year exile from the Premier League for Houllier since his reign at Liverpool came to an end in May 2004.
Houllier, who has been working as France's technical director, is expected to face the media for the first time in his new role on Thursday. His first match in charge would be the away clash with Stoke on Monday.
Houllier's former Liverpool number two, Phil Thompson, is expected to follow him to Villa Park.
When Villa started recruiting in earnest to replace O'Neill, they admitted that Premier League experience was high on their list of priorities - and Houllier has that in abundance.
The former schoolteacher has been in management for 37 years and his clubs included Lens, Paris St Germain and, after leaving Anfield, Lyon.
He joined Liverpool in July 1998 and won the Uefa Cup, two League Cups, an FA Cup and a European Super Cup during almost six years at the helm.
He had more than a 50 per cent winning rate from his 325 matches in charge as Liverpool's first non-British manager.
Houllier, who was awarded an honorary OBE for his services to British football, suffered heart problems during the end of his term at Anfield, although he looked in prime condition when seen at Jamie Carragher's testimonial on Saturday.
Thompson has worked as a pundit with Sky Sports for the past six years since leaving Anfield, where he formed a successful partnership with Houllier.
He will also bring a massive bank of experience to Villa based on three decades on the playing and managerial side at Liverpool.
He won three European Cups and seven league titles as a player and latterly as captain in addition to 42 England caps.
Thompson then worked alongside Kenny Dalglish, Graeme Souness and then Houllier in the Anfield dug-out after hanging up his boots at only 31.
The 56 year-old also had a spell as caretaker boss when Houllier had to undergo heart surgery.
It is still to be decided what role the current caretaker manager Kevin MacDonald would have under the new regime. He has been successful as reserve team coach but may be offered a post as part of the first-team set-up.