Since taking over this summer, Brendan Rodgers has promoted the likes of new England international Raheem Sterling, Andre Wisdom and Adam Morgan to his first-team plans at Anfield.
And former Liverpool boss Hodgson - who has also been impressed by another Merseyside youngster, currently injured England defender Martin Kelly - is pleased.
Hodgson said in the Daily Star Sunday: "It's nice to know Liverpool are promoting their young players.
"I've got to say, when I went to Liverpool, I was impressed with the academy and some of the players that we had there.
"Players like Wisdom, Sterling and Kelly played a lot of games when I was coaching there.
"So, I was aware of all these players and it's very nice to see them coming through and doing so well.
"Sterling has stepped up from being a talented, potential first-team player, to being a very obvious first-team player."