The pair worked together at Bristol City when the club went bust in 1982.
Now, as Hodgson attempts to deal with a turbulent season on Merseyside, Houghton reckons that the experiences both men shared at the start of their careers make him the ideal man to take Liverpool on following the reign of Rafa Benitez.
Houghton said: “We worked together at Bristol City for about 16 months and spent the whole of that time trying to keep the club afloat.
“We went as coaches, but we would have been better off going in there as accountants – we would have had more chance of keeping things going. Bristol City folded and Bristol City 1982 Limited replaced it, I think. Now the club would have had points deducted and would probably been relegated, but back then they managed to maintain their position in the League although we got our contracts cancelled.
“I left to go and work in the United States but Roy stayed on for another six months. In the end, though, it was a lost cause because we had no players.”
The pair’s fortunes in the West Country were in sharp contrast to the ones they enjoyed in Sweden.
Houghton said: “We went to school in Croydon. We were at John Ruskin Grammar school and strangely there were four of us in the same class who went on to manage in the Football League – Roy, myself, Lennie Lawrence and Steve Kember. That was an unusual class.
“I took Roy to Sweden to work with me at Malmo in 1974 and we had a couple of good years there. Halmstad asked me to recommend a similar English coach and I recommended Roy.”
Hodgson won the Swedish title twice with his new club, while Houghton led Malmo to the 1979 European Cup Final against Nottingham Forest.
Houghton said : “He’ll be different for Liverpool because he’s very much a coach.
“I think the success he had in the last two years at Fulham was really down to his coaching rather than his buying or selling players which seems to be more of the requirement at the big clubs these days.
“I’ve no doubt he’ll do well. I’m sure Liverpool won’t throw up anything he hasn’t seen before. This time, he’s just on a bigger stage.”