O'Neill admits the youngster's rashness when tackling is a particular problem even in training, but he has faith Delph will eventually make the grade.
O'Neill told The People: "Occasionally he has to be reminded that I need the players here. I don't need him putting four boys in the treatment room to prove that he can tackle - he has to save that for match day.
"On the pitch he leaves the foot in and he's competitive. He's not shy of putting a challenge in, for someone so slight.
"So from that score, I wouldn't have a problem with him. It's one thing to keep that attitude, and another to curb it because you are liable to get booked once or twice.
"More importantly, as of this minute, he hasn't actually really learned the art of tackling properly so he leaves his body open to being injured.
"I don't want to knock any aggression out of him because that is part of his make-up. The other one is not to be going in in a manner that is almost dangerous to yourself.
"I'm talking about the technique challenging, he'll go in regardless of safety for himself, where the more experienced players will go in and make sure that they are well enough protected."
Delph's confidence at Villa took a knock almost immediately on his Premier League debut against Wigan on the opening day of the season in a 2-0 defeat.
The midfielder has been restricted to just two league starts since, one of which came in their midweek 1-1 draw against Manchester United, and O'Neill admits lack of action has been tough on the teenager.
"I've got faith in him, I know that he can play and he'll be a proper player in the next 18 months," said O'Neill, who remains confident in the money he spent.
"His biggest problem is that he's gone from playing 60 or 70 consecutive games for Leeds to playing intermittently here.
"He's learned to cope with that and I'm hoping between now and the end of the season that he'll get his fair share of outings, because we will need him."
O'Neill added: "Then I think you'll see a bit more quality from him, particularly next year."
Crystal Palace v Aston Villa To Score in 90mins: Delph, F. 11/2