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.
But the former Reds captain is being lined up to work alongside Houllier, who will be confirmed as Villa boss once he has informed France of his decision to quit as their technical director.
Thompson will bring a massive bank of experience to Villa based on three decades on the playing and managerial staff 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 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.
Houllier is due to meet French Football Federation president Fernando Duchaussoy tomorrow when he returns from France's Euro 2012 qualifier against Bosnia and Herzegovina in Sarajevo tonight.
"I will meet Wednesday to take stock of the situation with him [Houllier], I'll ask him," Duchaussoy told reporters.
"I would like to continue working with him."
If all goes to plan for Villa, Houllier should be unveiled at a press conference on Thursday.
His first match in charge would be away Premier League clash with Stoke on Monday.
It is still to be decided what role the current caretaker boss Kevin MacDonald - a former Liverpool player - 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.