The Reds along with Tottenham and Italian champions Juventus have all been linked with the gifted midfielder, but The Blades have yet to field a bid for Tonge.
Liverpool will get a first-hand look at Tonge when the two teams meet in the Worthington Cup on Wednesday, and Houllier has confirmed he is a fan of the youngster.
"We have watched Sheffield United quite a few times because we've been monitoring Tonge," said the Frenchman. "He is a player we have been interested in."
Tonge has previously expressed a desire to test himself in The Premiership, and The Blades` fine run of form could secure promotion to the top-flight.
If United fail to secure promotion however, a summer bid could well prise the youngster away from Bramall Lane.
