Young has been sidelined since flying home early from the pre-season Peace Cup tournament in Spain because of a thigh problem.
The right-back was also given compassionate leave by Villa after the death of his half-brother.
But Young has been making good progress and has been pencilled in to play against Wolves in Wednesday's reserve-team clash.
O'Neill said: "Luke is doing really fine. I would say by the time we come back after the international break he will just be about right.
"There is a reserve game coming up which he would probably would need but he is doing very well indeed.
"There are no ill-effects from the injury and, psychologically, I think he is improving greatly since the death of his half-brother."
Young was one of Villa's most consistent players last season after his £5million move from Middlesbrough even though he played out of position on many occasions at left-back.
But he now faces competition from Habib Beye - signed from Newcastle in the close season - for his place.
Man. City 6/4, Aston Villa 7/4, Draw 12/5