The midfielder is preparing to return to action in Saturday's FA Cup semi-final with Chelsea.
Milner was rested for last Saturday's 1-0 win over Bolton at the Reebok Stadium after being troubled recently with a sore Achilles.
O'Neill is mindful of the fact that Milner has played virtually non-stop football for two seasons after being part of the England Under-21 squad in the European Championships last summer.
He is aware Milner could also be part of the World Cup squad in South Africa in June and recently gave him a short break to recharge his batteries.
O'Neill said: "James is keen to play and that is always very important. He had the chance to rest up last week and it will be great for us to have him.
"He has been going non-stop since last summer. He is an extremely fit lad.
"He is as fit as any player in the Premier League but we have had to try and look after that fitness. He is a fellow who would love to train every single day.
"But there are some days that I think, because of niggling injuries, you can miss a day or two and still feel as if you have not missed something in training.
"A couple of weeks ago we gave him four or five days off remembering he had no proper break last summer.
"We have been trying to monitor things, as much for England's benefit as our own but, primarily, from our own perspective."
O'Neill added: "He is similar to Wayne Rooney in that he wants to train all the time and play every game and sometimes, even for his own good, it might be better if he could take that rest for a day or two.
"I think he accepts that now but he is as fit as anyone."
O'Neill is keen for Villa to clinch a second final spot after losing the Carling Cup final to Manchester United, particularly after losing 7-1 at Chelsea a fortnight ago.
He said: "The appetite for this game is even stronger having been to Wembley once this season. It is a great incentive for us.
"We lost the Carling Cup final and you could see by the second half performance in the FA Cup quarter-final at Reading that there was a renewed determination to get back there again.
"Of course, we face Chelsea. That won't be easy, particularly after what happened a fortnight ago, but the players are ready to go.
"We certainly got some lost confidence back from winning at Bolton and not conceding a goal helped us too. We know how difficult the task is ahead but we are ready for it.
"There is no question for a few days we were all pretty despondent after the Chelsea defeat, but the great thing is you get a chance quickly to put things right."