CNN -- Roy Hodgson has been appointed as the new Liverpool manager to replace Rafael Benitez, the English Premier League club announced on Thursday.
Reports suggest it cost Liverpool $3 million to release the 62-year-old from his 12-month rolling contract at Europa League finalists Fulham.
"This is the biggest job in club football and I'm honored to be taking on the role of manager of Britain's most successful football club," Hodgson, who has signed a three-year contract, told Liverpool's official website.
"I look forward to meeting the players and the supporters and getting down to work at Melwood."
Aston Villa's Martin O'Neill and Marseille manager Didier Deschamps were also linked to the Liverpool post, but it is thought Hodgson was always the club's first choice.
Benitez left the club by mutual consent in June and has since taken over from Jose Mourinho at Italian champions Inter Milan following the Portuguese coach's move to Real Madrid.
Hodgson joins Liverpool after a successful spell at Fulham, where he guided the London club to a historic first European final last season, losing 2-1 to Spanish side Atletico Madrid in Hamburg.
Hodgson has had an extensive managerial career both at club level and on the international scene.
He won seven Swedish league titles with Malmo and Halmstads before spells at Inter Milan and Premier League outfit Blackburn Rovers.
He also had a successful time as Switzerland's coach, helping them reach the last 16 of the 1994 World Cup.
Hodgson, who was voted by his fellow professionals as England's 2010 manager of the year in May, will now attempt to persuade some of his star players that their future remains at Liverpool.
The 18-time English title winners failed to make it into next season's European Champions League, after finishing seventh in the Premier League.
Now captain Steven Gerrard is thought to be on Real Madrid's radar, while Fernando Torres of Spain and Argentina's Javier Mascherano have both been linked with a move away from Anfield.
However, Hodgson has already been given a huge vote of confidence after Gerrard praised his arrival at the club.
"The club have made a good appointment in Roy Hodgson," the 30-year-old England midfielder told Liverpool's website.
"Rafa left a few weeks ago and I know the club were determined to take their time and get the right man for the job. Roy is hugely experienced and I believe he is the right man for Liverpool.
"I think it's been worth the wait and I'm sure he's just keen now to get on with it and start to quickly put in place his plans for the new season."
Hodgson will also need to strengthen a squad that is severely lacking in depth if the team is to challenge for honors next season.
However, that may prove difficult as Liverpool's American co-owners George Gillett and Tom Hicks have running debts of around $520 million, providing Hodgson with little spending power at his disposal.