Jose Mourinho is keen for the 29-year-old to sign a new contract at Old Trafford and Nicol says he is fully deserving of an extension.
“Absolutely (he has a vital role at United) and I tend to agree with that," the Liverpool legend said on ESPN FC.
“If you're looking for an aesthetic, stylish football player, then you're not looking at Marouane Fellaini.
"If you're looking for a guy that actually makes a difference when he's on the field, then you are looking at Marouane Fellaini.
“There's been so much talk about how he doesn't look like a football player that everybody just thinks that automatically now, but don't kid yourself.
“This guy plays in a Belgium side that is chopped full of talent and he can play in that system.
"So don't tell me he's not a good football player.
"If he world class? No he's not.
“But he makes the difference and when Marouane Fellaini comes on the field, you can pretty much guarantee that the team's going to change the way they play.
“They're going to get the ball forward early and that involves him and most of the time it makes a difference."