By Chris Bevan
Crouch scored his eighth goal in his last 10 Champions League starts
Peter Crouch put the Reds ahead when he stretched to meet Dirk Kuyt's cross and Liverpool, who were inspired by Yossi Benayoun, went on to dominate.
Crouch missed with two more headers but Sami Hyypia did make it 2-0 when he met Benayoun's corner at the near post.
Kuyt, who also hit the bar, netted with a low shot to make it 3-0 then ran clear to slot home a fourth goal.
It was an emotional night at Anfield, with the Reds paying their own tribute to murdered 11-year-old Everton fan Rhys Jones before kick-off.
The Toffees' theme of Z-Cars was played and the crowd applauded as Rhys's parents stood on the touchline in their Everton shirts.
Given the circumstances it could have been difficult for the Liverpool players to focus on the task in hand but they soon settled once the game began.
Benayoun has had limited first-team chances since joining from West Ham in the summer but he showed Benitez why he feels he deserves more opportunities.
Rhys Jones's parents received an emotional reception at Anfield
The Israeli had already set up Kuyt to force a diving save from Toulouse keeper Nicolas Douchez when he won back possession to start the move that led to Crouch opening the scoring.
Kuyt ran on down the left before supplying a peach of a cross which the tall striker turned in at the far post.
The tie should really have been wrapped up by half-time but Crouch somehow headed another Benayoun ball over the bar before wasting an inviting ball from Alvaro Arbeloa.
Toulouse, who had come to Anfield trailing by a single goal, still had hope at this point but in truth they never looked like finding a way back into the tie.
Their only chances came from two sloppy clearances by Jose Reina and their best effort was a scuffed shot by Andre Gignac which summed up their night.
606: DEBATE Having made seven changes from our league win on Saturday against Sunderland this just shows what a quality squad we have
SR
Liverpool were home and dry when Hyypia rose unmarked at the near post after the break to head home Benayoun's corner and from then on they coasted home.
Substitute Ryan Babel went close before Kuyt, who had already had one shot deflected on to the bar, exchanged passes with his compatriot and drilled his shot past Douchez.
The home side were not finished yet and Benayoun was again the creator, sliding a ball through for Kuyt to slot home a fourth goal.
It was the first time since 1997 that neither Steven Gerrard or Jamie Carragher had featured in a European tie for the Reds but, even without their two talismans, this was a thoroughly convincing display.
"We scored four good goals and could have scored a lot more. We now have two players for each position and you can see our squad is stronger than it was.
"I have players everywhere who want to play and have the ability to play."
"There is a difference between the French league and the English league.
"Liverpool were fresh, fit and strong and it showed at the end of the match. We struggled once they got their second, they play in a far stronger league."
Liverpool: Reina, Arbeloa, Hyypia, Agger (Finnan 81), Riise, Benayoun, Sissoko (Lucas 68), Mascherano, Leto (Babel 75), Crouch, Kuyt.
Subs Not Used: Itandje, Torres, Alonso, Pennant.
Goals: Crouch 19, Hyypia 49, Kuyt 87, 90.
Toulouse: Douchez, Cetto, Ilunga, Paulo Cesar, Mathieu (Sissoko 81), Dieuze, Fofana, Sirieix, Elmander, Emana (Fabinho 76), Gignac (Bergougnoux 54).
Subs Not Used: Riou, Jonsson, Mansare, Batlles.
Att: 43,118.
Ref: Wolfgang Stark (Germany).
Liverpool went into Tuesday's game knowing they would struggle if they conceded. Liverpool were without  or  due to injury but managed an easy win at home to .

 put Liverpool 1-0 up after 18 minutes with a header scored from a  cross. From here, Liverpool dominated the game.  scored the second goal with a header from a  corner.

In the second half Kuyt was denied by the crossbar after his shot had taken a touch off  Cetto but he got his first goal of the season on the 87 minute mark after a fine one-two with substitute, and Dutch compatriot, Ryan Babel. Kuyt then scored his second, and Liverpool's fourth, with the last touch of the game from a Benayoun assist.
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