Dier played almost exclusively as a defender for Mauricio Pochettino's team last season in his first campaign at White Hart Lane, but after being moved into midfield by his manager he has reached new heights in a title-chasing Spurs side.
The 22-year-old has played in every Premier League match this season apart from one for which he was suspended, and has broken into the England side, announcing himself with a last-gasp winner over Germany in March.
He has stepped back into the backline as cover when needed this season, and King, who broke into the Spurs side as a midfielder before converting to defence, believes that Dier would benefit massively from a permanent return to centre-back.
The 35-year-old told ESPN FC: "I don't want to be disrespectful but I still think he'll be a centre-back and that's nothing to do with his performances in midfield, because he can clearly play there. If he was to move back to centre-back, he would be even better there, especially given his experience in midfield.
"You see the game a lot more clearly. That's what I was able to do after playing in midfield. Centre-half felt like a doddle and that can be true for Eric as well. You play in midfield as a centre-half and find time on the ball in an area that's congested.
"When you get to the back, it's easier. You have time on the ball and you're more comfortable. You see the game a lot more clearly. The game comes to you. That's something he can do, it'll help him. I feel he can be a world-class centre-back after having this experience in midfield. [But] he looks like he's enjoying playing in midfield, so it's up to him."
Dier has been integral for Spurs this term and has played a big role in helping the club achieve their most successful season in recent memory.
The North London side may now be in with only an outside chance of winning the Premier League title after Leicester City's lead at the top was extended to seven points last weekend, but Pochettino's side remain odds-on to qualify for the group stage of next season's Champions League.
Dier has been a fixture in the Spurs starting XI in all competitions this season, featuring 44 times for the club and scoring four goals.