Puncheon has been one of the Eagles’ stand out performers for the past few seasons, but he has always been overlooked by the Three Lions.
Roy Hodgson has tended to pick other options for England, and Merson believes this has been an error.
"I’m a big fan," Merson said. "I don’t agree with [Wilfried] Zaha being called up, but this lad, I think, could step up and play international football.
"He can do something different. He’s comfortable in possession and he sees a pass.
"I mean, I nearly fell over the other day when I saw [Fabian] Delph."
Puncheon has been a revelation at Palace since being handed an attacking midfield role, where he has thrived.
There were some doubts over his ability to play in the Premier League prior to his move to Palace, but he has been superb since moving to Selhurst Park.
The former Southampton man now plays a key role for Alan Pardew’s side, where his creativity and dribbling skill is allowed to shine.
Puncheon’s good form has lifted Palace into 10th place in the Premier League table, with the London outfit’s next match coming against Sunderland later this evening.