Allardyce accused Benitez of showing a lack of respect as a result of gestures made by the Spaniard following Liverpool's second goal in the 4-0 win at Anfield.
Manchester United chief Sir Alex Ferguson also accused Benitez of showing contempt to Allardyce with the gesture, but Liverpool assistant manager Sammy Lee defended Benitez claiming the Reds boss was communicating with his own players.
Benitez has now revealed he made the gesture in reaction to Xabi Alonso not agreeing to his orders when taking a setpiece.
"Xabi Alonso and Emiliano Insua were standing over a free-kick and I was shouting orders to them in Spanish," Benitez told the Daily Mail.
"I kept saying, "Play it short" because I thought there could be a surprise element. But Xabi just whipped it straight into the area and when Fernando Torres headed it in, he turned round and gave me a big grin.
"I had to laugh and I just made a sign to say, 'OK, don't listen to me'."