The Croatian playmaker is being heavily linked with a move to Chelsea this summer but Redknapp has made it clear that Spurs cannot afford to sell a player of his ilk as it may send a message to some of the clubs other stars.
"I have seen that sort of thing before. West Ham decided to sell Rio Ferdinand and then all of a sudden they all seemed to go. That's no good for any club.
"Tottenham need to keep their best players as well as add more quality to the squad if they want to mount a serious challenge for the title.
"Other top clubs raise the bar all the time and Spurs must keep pace. It's as simple as that."
He added: "Luka wants to be successful and if we can improve the squad then he can achieve that with us.
"I don't envisage a problem with Luka. You could not meet a more professional man or a nicer person.
"It is so important for the club to keep him. I think we have to show him our ambition, which we will do.
"If we can add one or two good players to our squad there's no reason we can't have another great season. So Tottenham could be a great club for him to stay with for the next few years.”