O'Neill believes England have an excellent chance at the tournament - because of the quality of their squad and the favourable group stage draw which puts them up against the USA, Algeria and Slovenia.
"This is a big time because England have a proper chance - a real proper chance," O'Neill told Villa's website. "You couldn't have handpicked the group better and they give themselves a great chance.
"It is alright for me because I am not looking at it through Capello's eyes at all and he will consider the games difficult and I'm sure there will be difficulties along the way - and maybe an unexpected difficulty in the games early on.
"But you would expect them to get through, expect them to top the group they are in and if things worked out in the other group, their last 16 opponents look not bad.
"So things are geared up. Of course, like everything else, things can happen. You can pick up an injury here and there, a major player can get injured and upset the balance but overall I think England must go there with real genuine hope of being able to do something.
"It doesn't mean that Brazil wouldn't be strong - they might even produce a player or two that we don't know that might even have played in Brazil and we haven't seen them in Europe. Argentina possess the best player in the world at this minute [Lionel Messi] and the other centre forward [Gonzalo Higuain] playing for Real Madrid.
"If Maradona gets his thinking cap on, he'll maybe produce a real side despite their troubles to qualify."