The Reds have produced four wins, one draw and a loss in the Premier League since Kenny Dalglish took over in early January - a marked improvement on their time under Hodgson.
"That is a big question, isn't it? How to explain that. Look at the team - we played awful, we were s***," he said.
"And he is a part of the team, so when everything is playing well, he plays a lot better. It is the same for everybody, for me, for Stevie [Gerrard], it is the same.
"When the team are performing, when you look at every single player they are playing better. But when we are losing, everybody is on top of us, everybody is playing bad."
But for all the negativity that has occurred this season, Agger is delighted to now have Dalglish at the helm.
"Confidence can win you games and somehow Kenny and Steve [Clarke] have put the confidence back in the players and I think we have shown that definitely in the last four games. It is looking good, but there is still a long way to go," he added.
"Kenny is a positive guy and he is, in football terms, positive. First of all, because he likes to play positive football, going forward, and keeping the ball on the ground and I think he is good among the players.
"The training sessions have been really good and I think everything starts at the training ground. If you can get that right you have a big advantage in the games.