Houllier is reportedly interested in the keeper, but Steele has also been strongly linked with a £4million move to The Emirates.
Boro however have said that they want to keep their star goalkeeper, but the club’s financial struggles and exceptionally large payroll may see Steele move on.
The Gunners, who have been struggling to find a suitable keeper for a while now recently lost out in their chase for Mark Schwarzer and are back once again to square one.
Villa are preparing for the eventual retirement of veteran Brad Friedel and have also been chasing Rangers and Scotland star Allan McGregor.
Boro manager Tony Mowbray is thought to be looking at potential replacements if any potential deal becomes reality.
Watch this space.