Capello, whose team have been drawn with the USA, Algeria and Slovenia in Group C at the finals starting on June 11, said England were one of the leading sides at the tournament.
"I hope the semi-finals is a minimum. We have good players, we think we can beat all teams because we play at the same level of all the best teams in the world," the Italian told reporters at the Laureus World Sports Awards on Wednesday.
Capello, whose team cruised through qualifying after missing out on Euro 2008 under previous coach Steve McClaren, said England striker Wayne Rooney was one of the world's top players.
"(Lionel) Messi, (Cristiano) Ronaldo and Rooney are the three best players in the world. Rooney has scored a lot of goals," he said.
Rooney has netted 28 goals for Manchester United this term after being switched to a more attacking role following the transfer of Ronaldo to Real Madrid in the close season.
Capello also said sides from Africa, which is staging its first World Cup, could provide some shocks.
"I think the surprise will be one of the African teams - Ghana, Ivory Coast and Nigeria are all good. One of these three will be really dangerous."
England began their build-up to the tournament by beating Egypt 3-1 in a friendly at Wembley this month as preparation for the group match against fellow north Africans Algeria.
"It will be a tough game for us," said Capello. "I respect this team. They played against Egypt and beat them (in the World Cup qualifiers) so Algeria are probably stronger than Egypt."
The Italian, however, is looking beyond the early stages to a possible dream final with his native country.
"I hope to play against Italy in the final but my shirt at that moment will be an England shirt."
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