Houllier is Australia's new coach

The former Liverpool boss has been won over by a long courtship from Football Federation of Australia (FFA) officials, who saw him as the natural successor to Guus Hiddink, Russia's new coach.

Houllier will be allowed to honour the final year of his contract with French champions Lyon if he wants to before concentrating full-time on getting Australia to the 2010 World Cup in South Africa.

It represents a remarkable return to international football for Houllier, who was the manager of France when they failed to qualify for the 1994 World Cup finals.

He is expected to fly to Australia after the World Cup final next Sunday when he will be in Berlin to do media and corporate hospitality work. He has also been part of UEFA's Technical Study group during the finals.

Houllier spent six years as Liverpool manager before being sacked in 2004. In 2001, he won five trophies and also underwent major heart surgery.

Outgoing coach Hiddink has advised Houllier to keep his Australian assistant-coach Graham Arnold on board.

Federation boss John O'Neill said: 'We've got to keep the momentum going in Australian football. The nation now has high expectations and that's a good thing. Going into a game where you're confident of beating someone like the Italians, that's a good thing.'