Downing still has two years left on his contract and Houllier believes it is vital Villa hang onto him following last season's resurgence.
"From a club's point of view and a manager's point of view obviously you want to keep that sort of player - he's so rare," Houllier told the Sunday Mercury.
"He can use both feet and has got much skill. He was voted player of the year by his team-mates and the fans, that tells you everything.
"I personally think he improved a lot under our regime. He's a footballer, he's got flair and he's hardworking.
"He can play on the side and in the middle. He's very versatile, but also does his job. When sometimes it's a bit stormy and you have to have someone who helps defending then he can do that job as well. I'm not surprised that so many clubs are after him."