The Hammers' manager thinks the new additions will add to the club's "attacking unit", while he indicated the winger can provide his side with the width and crosses they need
The two players moved to Upton Park from Merseyside, with 29-year-old winger Downing joining for an undisclosed fee on Tuesday after agreeing a four-year deal.
The Hammers' boss believes the duo, who join the club's three other recent signings Razvan Rat, Adrian and Danny Whitehead, can help improve his side's goal threat.
"To pick up two players of the quality of Stewart and Andy is good business both financially and in football terms, and they will help to improve us as an attacking unit," the 58-year-old told the club's official website.
Downing scored just five goals in all competitions for the Reds last season and was likely to face competition for places from the likes of Iago Aspas and Luis Alberto this campaign before opting to leave the club.
Despite being considered by many as a flop during his time at Anfield, Allardyce feels the England international will be of benefit to his squad.
"Stewart is a great player with a very good pedigree," he continued. "If you look at his technical and physical stats, it puts him right up there among the top players we have at the club.
"He's a talented boy with good energy, and will improve the team quality, particularly in possession. He doesn't give the ball away, he can hold it if he needs to and he can dribble as well.
"Stewart will be able to produce the kind of ball we need, and will have the opportunity to cross the ball, just as he did at Aston Villa."
West Ham get their Premier League campaign under way on Saturday against Cardiff City.