The Daily Mail says Villa are set to turn to Benitez as a replacement for Houllier, should the Frenchman fail to recover from his health problems.
Houllier, 63, is not expected to return to Villa this season and has been advised to walk away from the game after a recent heart scare left him in hospital for a week.
Villa have yet to make a formal decision with three games of the Barclays Premier League season left and Houllier's No 2 Gary McAllister in caretaker charge.
Benitez, 51, replaced Houllier as Liverpool boss in 2004 and is available after leaving Inter Milan in December. The Spaniard knows McAllister well and considered him for a coaching role at Anfield. He is also well versed in Villa's youth set-up, having monitored many of their players while at Liverpool.