Centre-back Smalling has been in and out of the Manchester United side this season, starting 17 of the 29 Premier League games.
He has lost his place in the England squad with manager Gareth Southgate saying he prefers defenders who are more comfortable on the ball than the 29-year-old.
But Smalling has hit a fine run of form under United interim boss Ole Gunnar Solskjaer.
Thompson was seriously impressed with the former Fulham man in the historic Champions League last-16 second leg win over Paris Saint-Germain on Wednesday.
And he believes Smalling can be a similar leader for United than the club’s legendary defender Steve Bruce.
“Smalling has been quite incredible,” Thompson said on Sky Sports.
“This side on the night you knew were going to require leaders, good defenders, legs in the side, where you’re going to have to run, you’re going to have to chase, you’re going to have to keep people together and not get too stretched.
“One thing that Chris Smalling’s probably learnt over time from watching the likes of Gary Neville, always tucking in, always making sure the four defenders stay in there.
“Let the midfield players work hard to get wide, to stop crosses getting in, rather than the full-backs going out and it’s then stretched.
“Chris Smalling was that sort of guy and he has been, he’s much better.
“I can see where Gareth Southgate [is coming from] because he lacks that little bit of ability like Harry Maguire on the ball and passing.
“But nothing can make up for desire to defend, putting your foot in, putting your head in when it counts in that penalty box.
“That’s where he comes alive and that’s where he becomes a leader.
“Steve Bruce was very much like that, he was a fantastic defender.
“And that’s where I see Chris Smalling as being that leader.
“The other players are responding because he’s been there that long, more than the others.
“They do look up to him and he has been fantastic.”