The Portugal wing-back has been celebrated this season for his impact with City - as has manager Pep Guardiola for the way he has utilised the versatile defender when in possession. Indeed, for many pundits, the innovation of Cancelo slipping into midfield - or even attack - when City have the ball is something never before seen in the English game.
Hoddle said on his podcast ' The Glenn Hoddle Footy Show': "Yeah, he's a very, very good passer of the ball. The thing is for Man City at the moment they don't get tested too much defensively because they have the ball all the time.
"But on the ball he's excellent. Whether he plays in a back four, or sneaks into midfield and becomes an extra midfield player. And he has a pass on him, he can hit passes, every now and again he has a De Bruyne pass in him. So it's an added thing to their system, without a doubt."
However, as Hoddle says, the way City are dominating games means Cancelo is able to enjoy taking advantage of the freedom Guardiola has encouraged from him.
He continued, "They're like a Rolls Royce at the moment.
"They have so many options when on the ball. It must be a joy to play in that team. Can they win the Champions League, that's the question for me."
Focusing on Guardiola's decision to shake-up Cancelo's role, Hoddle says it was crucial City's manager had the right player to make the innovation work. Though, he highlights this season isn't the first time he's seen Guardiola employ such a tactic.
He explained, "Yeah, it's something he's had a look at. But you need the right player to do it. He did it with Kyle Walker and no disrespect, but Kyle Walker doesn't have that pass that Cancelo has. He did it efficiently, but not expertly.
"So Cancelo is the right one to do it.
"On the other side, they tend to keep their width, (Oleks) Zinchenko (Benjamin) Mendy, they tend to stay out wide. You only need to do it on one side of the pitch."
And Hoddle says Cancelo's switch simply adds to City's attacking threat - and options - when on the ball. The Spurs great arguing the Cancelo tactic has had a direct influence on the success of Ilkay Gundogan this season.
"What it does, is when Cancelo moves inside, it gives a midfielder the chance to go further forward and get into the opposition box. I think that's where Gundogan has excelled.
"I think last year you never saw him get as forward as he has been - and they have been playing with a false nine.
"So consequently Gundogan, more than anyother player, he's the one who has been rewarded in that system."
Listen to this week's full episode of 'The Glenn Hoddle Footy Show' - a Tribal Football partner - below:
Click here to visit the full archive of 'The Glenn Hoddle Footy Show'.