Milner has played as a second striker, right and left midfield and right-back for Villa at various times since his £12million move from Newcastle 14 months ago.
Last Wednesday Capello even used the 23-year-old at left-back for the final 15 minutes of England's win over Belarus in a World Cup qualifier at Wembley and O'Neill believes being able to fill in at various positions could benefit Milner when Capello has to finalise his squad for the finals in South Africa next summer
O'Neill told Press Association Sport: "The England manager has proved himself to be a winning manager for many years and decided to play James at left-back for the last 15 minutes against Belarus.
"I am not so sure that is something he would see as a regular occurrence. But James has played right-back for us so I think, between us and England, he just has the goalkeeping position to go to complete the entire set.
"Will that versatility get Milner into the World Cup squad? I don't think it would do any player any harm."