Despite their worrying league form, Houllier feels Dalglish must be given time after such a huge investment in players.
He sees similarities to his Anfield reign, which ended in 2004 when he was replaced by Rafa Benitez.
Houllier said: "They won the League Cup the same way we did in 2001 - it's a good sign for the future. I think he is heading in the same direction, just give him some time. Liverpool need another year to kick in.
"They have done a lot of recruitment and had a lot of problems, so give him time.
"There was a time when David Moyes was criticised and Arsene Wenger was criticised - see where they are now. It's a rollercoaster."