The former defender thinks an injury-ravaged season has been a disaster for the Liverpool forward.
The striker has spent the vast majority of the campaign injured after picking up a hamstring problem while away on international duty with England and being delayed and knocked back ever since.
He recently made a return to competitive action, but looked severely short of match sharpness and subsequently picked up another knock that looks to have ruled him out until the end of the season - per the BBC.
Now, Thompson says it has been a hugely forgettable year for the forward.
“It's really been a wasted season for Daniel, and it would have made such a difference to the team if he'd have been fit from the outset," he told Sky Sports.
“I know he's scored a few goals but it's just not been enough. His injuries have been going on for nearly the whole of the season - it’s been a nightmare for the lad.”
Elsewhere, the former defender says the 0-0 draw with West Bromwich Albion was a missed opportunity for his old side as they look to finish in the Champions League spots.
The Reds are currently fifth in the table, seven points behind fourth-placed Manchester United. However, they do have a game in hand against Hull City on Tuesday.
Wins over West Brom and then the Tigers would have seen that gap reduced to one point after Everton beat United on Sunday, significantly increasing the Reds hopes of securing a top-four finish, and Thompson says Saturday’s draw was a costly one.
"West Brom was obviously a missed opportunity, with other teams ahead of Liverpool dropping points,” he added.
“There was no cutting edge to either side, and that's been a problem for Liverpool particularly over the last few weeks. They never look like running away with a game 2-0 or 3-0 anymore.”