Houllier, who underwent a major heart operation when manager of Liverpool, was admitted to hospital in Birmingham on Wednesday evening. But the 63-year-old will need only "medicine and rest" to recover according to McAllister, who will take charge of the team against Stoke on Saturday.
McAllister, who was a player at Liverpool when Houllier underwent surgery in 2001, said: "I visited Gerard in hospital after training and was surprised how well he looked. It was really surprising. If you took away all the stuff attached to his arms, he didn't look ill."
The former Coventry boss added: "He is on the coronary ward. He was great and bubbly. He had a tough night but he was looking surprisingly well and in fine fettle."
"They (the specialists) are definitely saying there is no surgery needed, which is a massive plus.
"The last time there was major surgery. This time there will be no surgery needed, purely medicine and rest."
McAllister is confident the players will rally around Houllier in the same way as when Phil Thompson took charge at Anfield in the absence of the Frenchman.
He said: "There was shock within the Liverpool dressing room and we knew there was a major problem with the length of the surgery and what it entailed. It was a big operation.
"But Phil Thompson came in and that midweek we went to Kiev for a Champions League game and it was the first time Kiev had been beaten at home.
"The players rallied and were playing for the manager and I'm sure that is what will happen here. A perfect tonic for the manager will be getting three points against Stoke."
Source: PA
Source: PA