Former Liverpool manager Gerard Houllier has backed Arsene Wenger's claim that Arsenal's Champions League dreams were ended by bad refereeing decisions.

The Arsenal boss claimed the Gunners were denied a clear penalty in the first leg and that last night's second leg at Anfield was decided by a "dodgy" decision.

Houllier, speaking to reporters at the Soccerex conference at Wembley Stadium, said: "From a personal point of view I was happy Liverpool won but I also felt for my friend Arsene because over the two legs he deserved at least as much to win as Liverpool.

"To me it was a clear-cut penalty in the first leg and then one was given against them in the second leg. That's why he was not happy.

"At the top level a decision like that can make you or break you.

"But both teams showed marvellous qualities. They were two very good Champions League encounters and excellent promotion for the game itself. The attitude and the fair play was fantastic."

Houllier, now technical director of the French football federation, also claimed that many Liverpool fans and staff would swap another Champions League success for winning the domestic league - something that also eluded him during his years in charge of the Reds.

He added: "I think a lot of fans, players, members of staff and maybe even Rafa himself would exchange a Champions League title for a Premier League one and that tells you everything.

"Liverpool have not won the title for such a long time and they are craving for that.

"I think he has got the squad now, it could just be a matter of time."

Houllier added that Arsenal should have confidence for the future, and that they had done well with so many injuries.

"One of the main strikers, Eduardo, was injured, as was Rosicky and Sagna and van Persie just coming back - that's four players who could have been playing so perhaps credit to Arsenal for nearly making it," said Houllier.

"The need a bit more maturity and a bit more power. In terms of intensity and power the Champions League has increased a lot.

"But Arsenal have a wonderful team and with the age of the players they can only get better."

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