The Azzurri are the defending champions following their win in Germany four years ago but Chelsea boss Ancelotti likes the look of an England side moulded by his countryman Fabio Capello.
Ancelotti told Radio anch'io lo sport: "The England team has excellent credentials.
"They have players who play at a very high level and there are great expectations for the World Cup."
The former Italy centre-half added: "In Italy the situation is different because they are going through a transitional period.
"(Coach Marcello) Lippi will do well to unite the players who are emerging within the squad and those who were successful in 2006."
Ancelotti has been mentioned as a possible successor to Lippi after this summer's showpiece in South Africa but reiterated his desire to remain at Stamford Bridge.
"Me with the national team? No I am fine here," he said.
"I hope to stay at Chelsea, we have good chances to win things. I hope after Lippi it is an Italian coach but it is hard to say who the best candidate is."
Ancelotti also had words of praise for one of his Chelsea predecessors Claudio Ranieri, whose Roma side went top of Serie A on Sunday with just five games of the season to go.
Former Roma centre-half Ancelotti said: "It is surprising that Roma have overtaken Inter Milan at the top.
"But they have had an extraordinary season which has seen Ranieri do things no-one could have foreseen.
"The Giallorossi have not missed a beat.
"The one-point lead over Inter now has to be maintained though.
"And that will be hard as it is not easy."
But Ancelotti believes Ranieri is the man to guide Roma to their first Scudetto since 2001.
"Roma needed a coach like him, someone who could unify the squad," said Ancelotti.
"The club made the right decision to take him on."