Leicester take on Manchester United next weekend, sitting at the top of the Premier League table after 13 games.
It has been a remarkable rise for the Foxes, who were battling against relegation last season, and Neville has been hugely impressed by their progress.
"Once Leicester get up they never stop," he said. "They are a true Premier League team, the way they are playing this season.
"If you'd have said me and you will be there next week watching Leicester v Manchester United and it was first versus second, I'd have said you are mad.
"Full credit to both teams, and Leicester are the story of the season so far. They are so energetic, high-tempo, aggressive, direct."
Neville also had praise for Leicester’s man of the moment, Jamie Vardy.
The Foxes front-man has been deadly throughout the campaign so far, and he equaled a Premier League record at the weekend by scoring in 10 matches running against Newcastle United.
The 28-year-old forward has earned numerous plaudits, and Neville was keen to publicly announce his admiration for the striker, too.
“Vardy can cause you absolute nightmares,” he added.
"He's a massive handful, and whoever plays centre-back for Manchester United next weekend will know they've been in a game."
If Leicester are able to beat United at the weekend they could move four points clear at the top of the table, in a scenario which seemed very unlikely before the season started.