The Frenchman managed the Reds between 1998 and 2004 and was the man who handed Steven Gerrard his break in senior football.
He still takes a keen interest in goings on at Anfield and likes what he is seeing since Rodgers took over.
With the likes of Sterling, Suso and Andre Wisdom starting regularly, Liverpool is the youngest team in this season's Barclays Premier League.
"I am pleased with the way Brendan makes the team play," Houllier told Liverpoolfc.com.
"He plays the right way and I'm pleased he's given a chance to some of the young players. Some are very good.
"Sterling could be a major player for the club in the future and at the moment he just needs to be a little more composed, particularly in the final move of his game.
"Suso, Andre Wisdom and Joe Allen are all good players and it's very good for the future of the club."
Houllier was working for French TV at Goodison Park for Liverpool's 2-2 draw on Sunday and believes his former team was hard done by with the disallowed goal in stoppage time.
"Liverpool posed a major problem to Everton in changing the system in the second half, and I thought Brendan was very clever," said the 65-year-old.
"It really helped the team and in the end they probably could have won it.
"It was a goal. I don't know what the referee saw there because it wasn't offside. I thought initially he had given a foul for a push by [Sebastian] Coates but the flag was for offside. It wasn't offside.
"Sometimes things even up. I mean, we've got to remember we were lucky that time Sander Westerveld's clearance hit Don Hutchison in the last minute and went in the net, and that was disallowed."
Houllier had a decent record in Merseyside derbies — the most famous victory coming courtesy of a Gary McAllister goal in 2001 which helped Liverpool qualify for the UEFA Champions League for the first time.
"What I enjoyed most was the motivation of our own players," he said. "You understand what a derby means because of people like Stevie and Carra.
"In six years we had four wins on the trot and I think we lost only one but that was because we lost too many players, we had two sent-off. There's always something happening in a derby."
Photo via Facebook/Gerard Houllier