The 22-year-old midfielder was named Man of the Match when the Three Lions drew 0-0 with world champions Germany in November, and Hodgson believes that the youngster will excel in international football.
"In the games he has played [at Crystal Palace], he has been almost our best player in every one of them," the former England boss told The Times.
"We have Wilfried Zaha of course, but Ruben has certainly been on his coattails. I have not worked with many players better than Ruben Loftus-Cheek and what he can be.
"He has the chance to be a really top player at club and international level because he doesn't have any weaknesses."
Loftus-Cheek made 24 Premier League appearances this term, scoring twice and registering four assists despite being injured for large parts of the season.