The former Tottenham midfielder believes the Reds can dominate the two major competitions with the likes of players available in the team
Liverpool have started their Premier League campaign in the same vein as last year, winning all three of their matches so far.
Despite getting knocked out in the Carabao Cup fourth round against Arsenal on Thursday, Jurgen Klopp's side still looked very much inline for another run away in the Premier League after beating the Londoners 3-1 three days earlier.
The champions new signings Diogo Jota and Thiago Alcantara have flared in their recent appearances for the Reds with the former Wolves forward scoring on his Anfield debut.
Tottenham legend Hoddle believes the Premier League reigning champions have had the make up of a side ready to go and win even more silverware this season.
"I think they’ve improved the squad no-end, I really do," Hoddle told BT Sport.
"I think Jota came out of the blue, but it’s a very shrewd buy.
“Thiago, well he keeps the ball for fun, and in that Liverpool side, I think they’ve gone up a couple of more gears, that’s why I think they’re my favourites to win the Champions League this year and possibly the Premier League as well.
"It's a big task, but that would be an unbelievable achievement if they could do that.
"I think Liverpool are the best team in Europe with the balance in the way they defend and the way they attack, it's not just all about attacking with Liverpool - they're solid defenders.
"We've seen Fabinho go in the back four the other day, he was outstanding. They've got options all around the pitch. Players like Oxlade-Chamberlain, they've got a depth now, he's a great player, but he hasn't had a chance.
"They've really got a squad there that I think could win the Premier League and the Champions League"
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