While Houllier is confident that the hugely talented 24-year-old would excel on the left flank, he has urged Sven Goran Eriksson to make the most of Gerrard's dynamic runs and tenacious tackling by handing him a place at the centre of the midfield battle.
Houllier said: "For Steven Gerrard, the tournament is an opportunity for him to propel himself into the world class bracket.
"It is a competition that can inspire him to reach new heights. That step up to world class is the only thing that is missing for him now, although his performances for Liverpool last season were of an awesome standard. I haven't seen anyone to match him. Steven's has been a careful evolution. He has matured as a person and understands what is within his grasp.
"There is no doubt that Steven will be England's key player. He hasn't had the opportunity to make his mark in a tournament before now because of injury and he will be hungry to make an impression.
"I would play him in the middle. I don't think playing on the left is his best position, but you know he isn't going to let you down from there.
"He has the capacity to cause a lot of problems. Look at the Turkey game. It was Stevie who won the penalty which Beckham missed.
"The French will have to watch him. I know Zinedine Zidane has a lot of respect for Stevie. He appreciates his talent and that is probably the best compliment you can pay him. To have the respect of someone like Zidane says everything."