The 20-year-old has started four of Tottenham's last five games and his performances during the Olympics earned him a call-up to the England squad for August's friendly win against Italy.
"I think for Steven it will be a privilege to play for the first team of England, for sure," the Spurs head coach said.
"If it came sooner it would be a more important achievement, but I don't see (him being left out) as any kind of negative.
"We certainly believe a lot in the player. That's why we decided to extend his career and that's why he played at Old Trafford and against Lazio.
"I think he is showing exactly the competence and the talent that he has and he will triumph in the future."
"(Whoever replaces Terry) is walking in the footsteps of probably the greatest English central defender in the last decade so it's a difficult position for England," Villas-Boas said.