"Milner is a fantastic player. He has improved more than any player in the squad," said Capello.
"He is intelligent on the pitch, can make good passes, assists for goals and score himself. He is very like Frank Lampard, younger but with great energy."
Capello also expressed his hope that Johnson continues to get regular football after swapping Middlesbrough for Manchester City on transfer deadline day.
The Italian admits he is a big fan of the midfielder but that he needs to see action in the first team to be granted a full international call-up.
Capello gave the example of Joe Hart's resurgence at Birmingham and also warned Arsenal's Jack Wilshire, Kieran Gibbs and Theo Walcott that they too need to play.
"I watch a lot of Under-21 games because in the Premier League and the Championship I have seen a lot of good young players who are interesting for me," said Capello.
"Players like Kieran Gibbs, Jack Wilshere, Jack Rodwell and Adam Johnson have been improving. I like Johnson because he has a lot of quality.
"You have seen what has happened to Joe Hart at Birmingham. He has improved a lot because he plays.
"He makes fewer mistakes because he has more confidence and that has come from playing regularly. The same has happened with Johnson. Before there was Stewart Downing at Middlesbrough and Johnson's chances were limited. Downing left for Aston Villa and Johnson had his chance.
"It was important for Johnson to play and being in the Championship has been good for his development because he was playing all the time," explained Capello.
"He can play better now because he was the best player in the Championship. Sometimes it is good for young players to play in the Championship all the time rather than in the Premier League only now and then.
"I hope Johnson will be able to continue his development at Manchester City by playing.
"That's why I am pleased Wilshere has gone out on loan at Bolton because for a young player like him it will help him mature and develop.
"But Gibbs and Theo Walcott are not playing regularly for Arsenal.
"My experience teaches me that young players can improve a lot in two years. There are players who can step up in the next two years and come into the senior team for the Euros in 2012.
"We have talent and that makes the difference because without quality it is impossible to go forward and improve."
Meanwhile Capello insists he has no worries over his goalkeeping situation despite the injuries suffered by his regular number one David James this season.
"I am not concerned yet with the goalkeeping situation," he said.
"David James has some shoulder problems but I have Robert Green, Hart and Paul Robinson.
"Hart is having a fantastic season but it is too early to choose."
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