Phil Thompson, Houllier's number two at Anfield, had been linked with the assistant manager's role at Villa Park but has decided to continue working as a television pundit.
He said: It was hugely flattering and enticing to be asked, I had no choice but to turn the offer down.
"With Gerard, you are signing up to 12-hour days. You have to be totally committed. I would throw myself at such a challenge again but at the same time I do not want to uproot my wife and two boys and I'm not someone who could live away from them through the week."
The length of Houllier's contract has also not yet been revealed.
He will be formally presented to the media on Friday, with his first game in charge away to Stoke on Monday.
"Two of the key qualities which we identified as being of crucial importance in our search for the new manager were experience of managing in the Premier League and a strategy for building on the existing strengths in our current squad," said Faulkner.
"Gerard Houllier comfortably satisfies these criteria."
Houllier admitted it had been a "very difficult decision" to leave his post in France but he was "very happy and proud to join this great and historic club".
This is a tremendous challenge and one I am very much looking forward to taking o
"I could not turn down the opportunity to manage a club whose approach, both on and off the pitch, I have long admired," he stated.
"Aston Villa is one of England's biggest clubs and has an amazing set of fans.
"This is a tremendous challenge and one I am very much looking forward to taking on."
Houllier has an impressive record in club management, having led Liverpool to the FA Cup, League Cup and Uefa Cup Treble in 2001.
After leaving Anfield, he managed Lyon between 2005 and 2007, winning two league titles.
His other former clubs include Paris St Germain and Lens, and he also coached France between 1992 and 1993, when he failed to secure qualification for the 1994 World Cup finals.
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