The Argentine says his star forward ranks alongside the best in the world and added that the Rojiblancos must continue to take their Liga title hunt on a game-by-game basis
Cristiano Ronaldo, Franck Ribery and Lionel Messi have been shortlisted for the prestigious prize but the Argentine coach believes that the Rojiblancos' talismanic forward, who is now La Liga's outright top scorer on 19 goals, would have made for a very deserving victor.
"I have to say Diego Costa had a great game," the coach told reporters after Atletico's 3-2 victory at the Vicente Calderon. "If the deadline for the Ballon d'Or had been extended, he would be there fighting for it.
"He showed great responsibility [against Levante] and I hope he gets a bit closer to winning the Ballon d'Or next year."
Atletico's victory saw it move three points clear of Barcelona at the top of the table but Simeone is refusing to talk up his side's title hopes, saying that it will simply continue treating every game like it is a fight to the death.
"The fans of Atleti should be proud of the passion the players are showing; they are doing things that are unforgettable," he continued. "Being coach has been enormously exciting.
"We have got this club moving towards one single goal and we're not going to compromise on our philosophy of treating every game like it's the last of our lives.
"We are aware of our limitations and the difficulties we face so we have to keep rowing and rowing every day in the same direction to reach our destination."
Atletico will definitely go into the winter break at the summit of the standings should Barca fail to beat Getafe away on Sunday.