Brendan Rodgers said was proud of Celtic's performance at Villa Park even though a 4-2 defeat condemned them to a play-off tie against one of the giants of European football.
Defeat hurt Brendan Rodgers' side as they will play either Real Madrid or Bayern Munich in the play-off round after finishing 21st in the league phase. Their opponent will be decided in Friday’s draw.
But the Hoops boss believes his team have shown enough to give either of those powerhouses a game.
"We know it’s Real Madrid or Bayern Munich in the next round," he said.
"So that will be obviously a huge challenge for us, but we’re building confidence at this level and showing that we’re a team that can play and can work well and make it really, really difficult for the top teams.
"Clearly, it’s a great reward for the work the team and the club have done. Whoever we play they are clearly top-level teams."
About the defeat, Rodgers added: "The word that strikes me at the moment is pride. I think that coming to a team that, over the last couple of years has been at the highest level, in the Premier League.
"Within a few minutes they get the first goal, a quick second goal, then there’s a question asked of you as a team, your spirit, your mentality, character, everything about you at this level, but the players continued to play."
Pride was the over-riding feeling afterwards, with Aston Villa boss Unai Emery expressing his after they secured their place in the last-16.
Victory ensured Villa finished eighth in the league phase in their debut season in the competition and therefore avoided a play-off round.
They will face Atalanta, Borussia Dortmund, Sporting Lisbon or Club Brugge in the next round in March.
Emery said: "We are very proud of our work, of our way in the Champions League this year, of our work last year in getting here.
"There are a lot of strong teams to be favourites to be a contender. It is very important how we are here and how we started in this way. Now we enjoy the way, today was a fantastic day.
"The atmosphere was fantastic, it was a very good match. In 90 minutes more or less we played a brilliant match."
Villa needed to win and hope other results went their way to avoid a play-off round and they looked like they would hold up their end of the deal with ease as Rogers scored twice in the opening five minutes.
But Celtic, who were guaranteed a spot in the play-off round before kick-off, hit back before the break with two Adam Idah goals in two minutes.
Watkins put his side ahead, though, as he finally broke his Champions League duck on the hour before Rogers' third at the death sent Villa through.
Emery is determined to keep Ollie Watkins at the club this month amid offers from Arsenal but admits Jhon Duran's potential exit is a good deal.
Both of Villa’s strikers are subject to interest in the January transfer window, with their Premier League rivals having a reported £60million bid for Watkins rejected while Duran is set to join Saudi Pro League club Al Nassr.
Asked if he could say for certain Watkins would not be sold, the Spaniard said: "I don't want (him to leave).
"It is good news to have offers from other clubs. We want to keep our sporting objective through the players we have in the squad.
"Every player can be in the market if it is good for the player and the club. To get this deal we are going to be demanding. Watkins is our striker."
Duran was subject to a £57million bid from West Ham last week but now looks set to join Cristiano Ronaldo at Al Nassr, just two months after signing a new deal at Villa Park.
Emery said he wanted the Colombian to stay at the club but that it represents a good deal, with the player also wanting to move on.
"Our players are interesting other clubs and as well [they are] paying good money for us," he added.
"But of course our objective here is to keep our structure intelligently because we want to be on the sports side on the level we are and to keep it for a long time is the most difficult challenge we have.
"Of course sometimes we have to do it, maybe sell some players and as well change and try to continue improving always.
"I don’t know exactly until everything is done if Jhon Duran is leaving but if he is leaving it is good news for us because it means they are paying good money.
