Agbonlahor had an outstanding first full season at Villa and won the club's young player of the year prize for the 2006-07 campaign.

He also forced his way into the England Under-21 squad but blotted his copybook when having to be ruled out of the European Championships in Holland because coach Stuart Pearce could not contact him.

But Pearce is set to have talks with the Villa academy product and O'Neill is convinced he can break into Steve McClaren's senior squad.

Agbonlahor, whose team face Liverpool in their Premier League opener this evening, is confident he can repeat last year's success - a belief also held by O'Neill.

The Villa boss said: "Gabby has been terrific for us. He wants to improve and is not one of those who is content to sit around and be happy with being in the squad.

"He wants to get better. Against Inter Milan last Saturday he took on world-class players who found it hard to deal with him.

"After 12-14 games last season I was asked if he was capable of making the step up into the full England squad. I am more equipped now to talk about that. I would have to say he is capable of doing it.

"He is looking very sharp at the moment and that may be to do with the fact he had a decent amount of rest in the summer.

"I think Stuart Pearce is coming up here to speak with our under-21 guys, including Gabby, that will be great news."

O'Neill expects Liverpool to be serious contenders along with Manchester United and Chelsea to lift the league title after their summer spending spree.

Spearheading their attack will be Fernando Torres, the Reds' club record signing at more than £20million from Atletico Madrid.

O'Neill said: "Liverpool have gone big time this summer. They have not just fine-tuned things. They have gone wholesale in bringing in some of the biggest players and spending an awful lot of money.

"I believe they have the squad to contest the championship. I really think they are capable of winning it. They are as powerful as Manchester United and Chelsea."

O'Neill expects striker John Carew to be fit after recovering from a groin injury suffered in training.

But Patrik Berger suffered a knock to his leg in training yesterday and is battling to be fit to face his old club.