A last minute penalty converted by Youri Djorkaeff sent the reds tumbling out of a competition they'd won twice in the last three years, as Bolton came away from Anfield with a deserved victory.
The result was in some ways cruel on Liverpool, who did play some decent stuff, especially in the second half, but the sad truth is that they only have themselves to blame for this most disappointing of exits.
Houllier took the opportunity to rest some key players such as Hyypia, Gerrard, Kewell and Sinama-Pongolle, and recalled Dudek, Riise, Smicer and Murphy. Youngsters Anthony Le Tallec and Jon Otsemobor were also handed starts.
The night before, Arsenal had made eleven changes from their weekend line up, and still managed to thrash Premiership opposition at home. The fact that we left out a few key men and were beaten says a lot about the gulf that has developed between ourselves and the top sides. The sad truth is that we are nearer to Bolton's level than Arsenal's right now.
Sam Allardyce has done a great job, and in Jay Jay Okocha he has one of the best players in the league. The Nigerian is pure class, and a joy to watch. He'd grace any side in the land, not least Liverpool's. He'd be an improvement on any of our midfielders bar Gerrard and Kewell anyway.
Bolton are a team who work hard for eachother, and have some class in key areas. Experienced players such as Djorkaeff, Campo, Jardel, Okocha and Ibrahim Ba have been brought in on free transfers, and all played a massive part in Wanderers victory tonight.
Liverpool's starting line up contained eight full international players, but Houllier may as well have played the kids given how his side performed in the first half. Only Otsemobor caught the eye in a poor opening period, in which too many passes went astray.
Bolton had the lead after only four minutes, when slack marking from Traore allowed Jardel to head home Djorkaeff's corner at the Kop end. Traore was also caught out by Forsell at the weekend, and needs to get a lot tighter from set-pieces. Dudek also needs to look at his part in the goal, as he was rooted to his line and Jardel was no more than six yards out when he met the cross.
The reds almost hit back within a few minutes though, when Riise's free-kick was fumbled by Poole, who then did well to block Smicer's follow up effort. Riise and Murphy both put further efforts from dead balls over the bar, as Liverpool struggled to find a way through a well organised Trotters defence.
Bolton really should have added to their lead when Barness eluded Murphy and Riise, only for Pederson to head wide from his excellent cross. It was a real let off for the reds, but they failed to make the most of it, as their main attacking threat was the pacy bursts of rookie full back Otsemobor.
'Semmy' did himself proud all evening. His distribution was assured, he defended well when necessary, and he got the crowd excited every time he ran forward with the ball. One run into the box led to a great chance for H*****, but not for the first time this season, he slipped over in the act of shooting and the chance went begging.
The only other incident of note was an awful fumble by Dudek from Okocha's shot from the half way line. The ball was going wide, but Jerzy stuck out a hand and spilled it behind for a corner. He also seemed to injure himself in the process, meaning that Chris Kirkland had to go into an intensive warm up routine at half time in case he was needed.
Houllier must have been praying Dudek was ok, because the first half was so bad that it was inevitable that Gerrard, Kewell and Pongolle were all going to be needed. Having to replace Jerzy would have given Houllier a real headache in choosing which two of his outfield subs to choose.
Thankfully Dudek was ok, and ten minutes into the half Flo and Harry were brought on for the ineffective Diouf and Le Tallec. Diouf started the season in great form, but recently he's been mediocre. As for ALT, I felt a bit sorry for him. He's a lad who needs the ball at his feet and runners ahead of him. Tonight he was the one doing the running, and it doesn't suit him. It would be nice to have him and Flo on the same pitch for a change too.
Without ever hitting top gear, Liverpool slowly began to turn the screw and exert some pressure after the break. Emily had a shot cleared off the line, and Riise hit the bar with a shot from the tightest of angles. A goal had to come, and come it did. Diao sent in a good cross from the right, and Murphy met it at the far post to plant a header past Poole.
Houllier then made his last change, and one which would play a huge part in his side's downfall, by bringing on Gerrard for Traore. It was a strange decision, as Traore and Biscan had generally been very comfortable at the back and looked under little pressure. Djimi's marking had been suspect for the opening goal, but other than that he did nothing wrong. The change meant Diao dropping back from midfield to centre half, and it would be the Senegal man's reckless tackling that would be his side's undoing.
First, he jumped into a tackle on Okocha on the edge of his own area. Diao may have won the ball, but it was a dangerous tackle and it's hard to blame Mike Riley for awarding a foul. The Nigerian picked himself up, and coolly flighted a free-kick past a static Dudek. The Pole's positioning was questionable, and the way he stood and watched was reminiscent of Sander Westerveld. Not a great night for Jerzy.
The reds did well to get back into it with a great strike from Smicer with two minutes left, but just when we were all getting set for extra time, Diao lunged in on substitute Kevin Davies to concede what would ultimately prove to be the winning spot kick.
Houllier was livid afterwards, and for once he ripped into his players and spoke of how they'd let him and the fans down. One of my biggest problems with Houllier has been his unwillingness to speak honestly after games, so it was nice to hear him saying what he really feels for a change.
But we didn't play THAT badly tonight, so I was fairly surprised to hear Houllier's remarks. Put it this way, I've seen us play far far worse, only for him to talk of bad luck, and blessings in disguise. So it seems strange that he was so angry after this. Was it worse than Palace or Celtic last season?
His comments afterwards gave the impression of a man under extreme pressure who was blaming others to try and deflect blame from himself. Maybe that's not the case, and he just decided that he's sick of defending his underachieving squad. Whatever the reason, in my eyes the blame lies with the players AND the manager.
I'm not going to criticise Houllier for resting Kewell, Gerrard etc. He should be able to give his star players a break from time to time, as the players he's bringing in are internationals. It was nice to see him give Otsemobor a chance, but putting Diao into the middle of defence was a bad move, and cost us the game.
Saying that, Diao is an experienced player, and should know better than to be throwing himself into tackles in such dangerous positions. Houllier is entitled to expect a bit more common sense from his players, and I have some sympathy for the boss. But then who was it who paid £5m for Diao?
The only players who come out of this with any credit are Otsemobor, Riise and Biscan. Others may have done ok, but they could have done a lot better. Credit to Bolton, who played their part in what was actually a pretty entertaining game, but too many Liverpool players simply weren't up to the job.
What is being served up this season is simply not good enough. If the rumours I mentioned in the Birmingham report are true, then Houllier's future rests on the outcome of this weekends game at Newcastle. To be honest, my personal view is that Houllier will remain in charge regardless of what happens at St James' Park, and I'd be amazed if that is not the case.
Going out of the League Cup is a blow, especially considering our league form, but the style of play has changed this season, and we probably won't see the best of the team until the new year when key players will be back. I'd expect a big improvement in performances and results from January onwards, but if that's not the case then there's only one thing for the board to do.
Liverpool: Jerzy Dudek; Jon Otsemobor, Igor Biscan, Djimi Traore (Steven Gerrard), John Arne Riise; El Hadji Diouf (Harry Kewell), Vladimir Smicer, Salif Diao, Danny Murphy: Anthony Le Tallec (Florent Sinama-Pongolle), E**** H*****:
