Agbonlahor has staked his claim for a place in the World Cup squad with an impressive 10-goal league haul this season, including a brace against Fulham last time out.
Defoe has been in even more explosive form, hitting the back of the net 23 times in all competitions for club and country.
Although O'Neill recognises Defoe's potency in front of goal, the Villa manager says that Agbonlahor's hold-up play and creativity give him the edge.
"Gabby has other strengths. I think Defoe is as good a goalscorer as there is in the Premiership and therefore in Europe," he told The Times.
"He is a natural finisher and always has been.
"The second goal Gabby scored at Fulham was an extraordinarily good goal and I think he can score more goals.
"He's capable. But he also has other aspects to his game. He's very strong now on hold-up play, bringing other people into it."
Tottenham v Aston Villa 1st Goalscorer: Agbonlahor, G. 13/2