By Rob Stewart
The Merseyside giants may have had an up-and-down campaign but former Liverpool skipper Neal believes that the club is in much better shape than it was when Dalglish took over from Hodgson in January 2011.
"Kenny Dalglish has made progress this year but I didn't expect him to break into the top four this year after his first full season back in charge," Neal told Goal.com ahead of Hodgson's first game back at Anfield since he was fired by the Liverpool hierarchy.
"It will be up to Kenny to decide the way to get back up in to the top positions but it has definitely improved under Kenny and I can say that 100 per cent. He is on the right path."
Liverpool have already won the League Cup this season, are set to contest the FA Cup final against Chelsea on May 5 at Wembley, and will aim to climb up the Premier League table when they face the Baggies on Sunday.
"The Champions League or the European Cup as they used to call it during my day doesn't seem the same without Liverpool being in it and the sooner we are back in it the better," added Neal, who helped the Reds win the European Cup four times during 11 trophy-laden years at the club.
"We have a trophy in the bag already this season and we have the chance of another one and I would love to think that getting back into the Champions League is just around the corner.
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"We are lying in a position whereby maybe next year when Kenny has got things going at full throttle and certain players that need to be moved on are moved on and we can go at it full throttle."
Neal is hoping that £35 million striker Andy Carroll can end the season on a high following his winning goals in the Premier League game at Blackburn and the FA Cup semi-final with Everton.
"I hope that Kenny plays Andy Carroll from now until the end of the season so we can all have a look at him when he has had a run of games," Neal continued.
"He did well against Everton and Suarez took on a different role as well which meant he wasn't trying to dribble past a dozen players and then knock the ball in.
"As Steven Gerrard said, they have to discover more consistency and put the ball in the net a little bit more and he has to find ways of doing that.
"Whether it be getting more crosses in from full-backs and wingers from wide areas, I don't know. But we are going in the right direction. It just takes time."