"I'm happy, delighted, and can't wait to get on with the job," said Houston, who will officially assume his new role for the game at Crystal Palace on Saturday, although he did take charge for Arsenal's victory over Nottingham Forest on Tuesday evening.
Houston, born in Dunoon, played at left-back for Chelsea, Brentford, Manchester United and Sheffield United before finishing his playing career as player-coach at Colchester. He also played for Scotland.
It was at Old Trafford that his relationship with Graham began. Graham eventually brought him to Highbury as the reserve-team coach, and he was promoted to No 2 after his side won the Football Combination for the first time in six years. His abilities as a "spy", assessing the strengths and weaknesses of opponents, had been a major factor behind Graham's success.
Graham has still not seen the Premier League's "bung" report that cost him his job, according to his solicitors. Rick Parry, the chief executive of the Premier League, handed his findings to the Arsenal chairman last Friday, and indicated that Graham's representatives had also been presented with details.
However, a spokesman for Graham's solicitors said: "Contrary to Premier League comments, neither Mr Graham nor ourselves have seen the report."
Parry will relay the details to all Premiership clubs at a meeting in London today, having first discussed the issue with Sir John Quinton, the chairman of the Premier League board, who will recommend whether or not Graham should face punishment by the football authorities, should the allegations against him be proved.
Graham, who intends to "vigorously contest" his dismissal, could be banned from the game, although Hill-Wood has said that in his opinion no further action will be taken.
Middlesbrough's 2-0 win at Wolves on Tuesday might have been the result that grabbed all the attention in the First Division, but it was Tranmere who sneaked in to take the top spot for the first time this season, after Pat Nevin's goal sealed victory at Charlton.
The Tranmere manager, John King, was elated after the 1-0 victory at The Valley. "We were lucky, but we've often gone away, played well and lost," said King. "This time we got away with it. We didn't play with any fluency and Charlton were certainly unlucky." Tranmere are now on course to join their neighbours, Liverpool and Everton, in the Premiership.
King has turned things round in his eight years at Prenton Park, taking the club from the relegation zone to the fringes of the top flight - and the secret of his success is simple.
Tranmere's chairman and chief executive, Frank Corfe, says: "John is happiest when he is dealing with football matters. He is professional in all he does. He is very single-minded in his attitude and in his determination to succeed. Not only that, he has given us a team to be proud of in that they try to play good football at all times.
Graham Taylor, the Wolves manager, put the disappointment of his side's defeat behind him to forecast the race for the Premiership will go all the way.
Middlesbrough went back up to second place after the win at Molineux, proving their promotion wagon is firmly back on track after going though a rocky patch.
But with Tranmere going into the one automatic promotion place for the first time this season, and Bolton and Sheffield United showing good form, Taylor expects the lead to change hands a few more times before the end of the season.
Bryan Robson, the player-manager of Middlebrough whose return to the side after a 10-week absence has helped spark a much-needed return to form, echoed Taylor in predicting a tight contest. "It's far too early to say how important this result was," said the former England captain.
Robson also praised his side's defensive display after their disciplined performance. Second-half goals from Steve Vickers and the on-loan German, Uwe Fuchs, which both came courtesy of errors by the Wolves goalkeeper, Paul Jones, completed a home and away double over the Midlands side.
But Robson, like Taylor, felt the match had been won by the contribution at the back of Vickers and Nigel Pearson. "We knew it was going to be a hard battle early on, and that we were going to have to head balls away from our box because of the way they play," said Robson.
"Everything we had seen in our reports told us that Don Goodman and David Kelly would be a real handful, and that they had virtually taken teams on by themselves in the FA Cup. So we knew Steve and Nigel were going to be very important, and they played very well and after that we always felt we could get at them."
Meanwhile Taylor, in his previous role as England manager, has picked up his first award of the season - for his performance in the revealing Channel 4 documentary "An Impossible Job".
The Cutting Edge programme, which became infamous for its use of expletives, has been honoured with the Best Sports Event Coverage award for 1994 by the Royal Television Society.Reuse content