The 25-year-old has been pivotal to the Catalan side's bright start to the season, conceding just seven goals in La Liga as they sit nine points clear at the top, while they let in just one in the Champions League group stages.
With Bayern Munich shot-stopper Neuer, 31, out injured since last September, Ter Stegen has taken over as first choice with the Germany national team in recent months, and ex-Barca star Xavi believes the world champions are still in safe hands with the 25-year-old.
"He is currently one of the best goalkeepers in the world. He plays at a top level, he is a good man and is very professional," the iconic midfielder told Bild.
"When I saw him on his first day at Barcelona, I was surprised by his footballing qualities. He is a very, very good goalkeeper. I think he is more or less on the same level as Manuel Neuer."
Germany are well stocked with world-class talent and Xavi even overlooked his ties to Barca and their rivalry with Real Madrid to praise midfielder Toni Kroos, who remains pivotal to Zinedine Zidane's European champions.
"Kroos is one of the best midfielders at the moment," he added. "I think he is enjoying his time in Madrid.
"They have a strong team and they are among their best players."