The Wales winger believes Spurs have overtaken Arsene Wenger's side as north London's top team as they are on course to qualify for the Champions League at the Gunners' expense
Spurs are in fourth place with 48 points after 26 games, and Andre Villas-Boas' side can go four points clear of the fifth-placed Gunners if they beat West Ham away on Monday night.
And while Arsene Wenger's trophy haul has been significantly better than that of any of his rivals at White Hart Lane, Bale thinks Spurs now have a stronger squad than the Gunners - and one that will only get better as the club develops.
"I think five or 10 years ago Arsenal were always miles ahead of Tottenham. But that has changed in recent years," he told The Sun.
"Over the past few seasons we have closed that gap and I think now we have overtaken them on the pitch. I think we have the stronger squad.
"Hopefully we can continue to do that as a club off the pitch as well, with the new stadium that is being built. But on the pitch and as a team now we are a lot more consistent and as a club we're moving in the right direction.
"Arsenal may say they are still ahead of us. But whatever people's opinions I don't think anyone can deny we are up there fighting with them on merit now."
The 23-year-old has scored 13 goals in the Premier League this season to alert some of Europe's top clubs, and while he is pleased to be linked with Real Madrid, he admits he is happy after moving to a more central position at Tottenham.
"I am probably in the best form of my career," he continued. "It's probably the most I've enjoyed my football as well. I think the manager has to take a bit of credit - by giving me that free role he's given me the confidence to do what I'm doing now."
However, Bale did nothing to dampen rumours of a potential move to the Bernabeu in the future by declaring Los Blancos star Cristiano Ronaldo is the best player in the world.
"As an all-round player I think [Ronaldo] is better than Lionel Messi," he added. "It's obviously flattering that I am playing well enough to be compared to him. Hopefully I can keep on improving and get to the level he's at now."