Houllier said: "The players are low at the moment, but that's understandable after what happened last night. If they are down it means they care about the results, about the fans and about the club.
"I have watched a video of the game and I must say it was a high class European game. It could have gone our way in the first half when we had chances to score, but we didn't take them and then conceded a goal at the worst possible time.
"I was just waiting for half time to speak to the players and change one or two things tactically. Then Celtic got a free kick - which shouldn't have been given - and took their chance.
"We had two chances in the second half but just couldn't score. Then when they scored their second goal that was it. But I insist we could have gone through.
"I have told the players that the European journey for this season is over. All we hope now is that Celtic go on to win the UEFA Cup and that we qualify for next season's Champions League. If we do that then I will regard this season as being a successful one. We have eight games to play and they are going to be like eight European Cup finals for us. We know what we have to do."