The proposal should be re-submitted to the International Football Association Board (IFAB), the game's law-making body, Houllier said on Wednesday.
Houllier, who has managed France and Liverpool among others, is the senior member of FIFA's technical study group (TSG) which analyses trends and tactics at the World Cup.
He told reporters at FIFA's daily media briefing he was in favour of a fourth substitute if it would help maintain the game's entertainment and intensity, a feature of this World Cup.
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FIFA proposed the idea to the IFAB two years ago saying its introduction would limit the risk of injury in the later stages of knockout games or finals, but it failed to win the necessary 75 percent majority and was not passed into law.
The IFAB, which has since been expanded to include a new technical commission as well as the law-making body itself which comprises the four British associations and four representatives from FIFA, is notoriously conservative in its attitude to changing the laws.
But although it rejected the fourth substitute idea in 2012 Houllier said the TSG, through FIFA, would probably propose its introduction again.
"I think it would be a good idea and I think the TSG (through FIFA) will put it back to the board.
"I personally think it's time. You have probably noticed at this World Cup everything is so quick, the tempo has been so high and we have seen 29 goals scored by substitutes, a record."
"But among the technicians, we think we should have the possibility of another substitution," he said.
The IFAB, formed in 1886, predates FIFA by some 18 years and six of the eight members have to agree before any law can be changed or rule amended.
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