Midfield anchor man Palacios has become a favourite with Tottenham fans since his £12million transfer from Wigan last January.
Redknapp said: "Arsene said he had someone on trial but couldn't take him because he was overloaded in that position. It was Palacios, Steve (Bruce) took him to Birmingham and signed him after one day.
"He's a good player, a real competitor and a good character. We've not had a midfield player like him since Graham Roberts. He gets around the park, makes tackles and closes people down.
"Off the field he's the quietest person you'll find. His English is not too good but he's a great lad."