The Italian held a news conference on Monday, a year after his appointment, (watch the video now in FourFourTwo.com's ever-expandinginterviews section) during which time he has guided England to the top of their World Cup qualifying group and restored confidence in a group at rock bottom after failing to reach Euro 2008.
"I understood the problem immediately, when we played the first game against Switzerland (a 2-1 England victory in February)," Capello told www.thefa.com.
"The players were not tested mentally and physically. When we played at Wembley I understood that these were not the same players (as they were for their clubs).
"I realised that the problem was in the mind of the players. Now we are better. We need time and we will continue to work. It is important to be a psychologist but we need good players to win. Good psychologist, bad players - it is impossible to win. We want to be better."
Capello said the 1-0 away loss to France in his second game was the turning point.
"Back in the dressing room I told the players it was another step forward and they thought I was crazy," he said.
"I knew it would be hard, as France have been world champions and it was in Paris.
"But for half an hour we played very well and when you can play well for half an hour, you can play well for the whole game. After this game, because of that reason, we moved forward.
"I am happy with what we did to create a group mentality and team spirit," he said.
"We have managed to recover the confidence of the players - this was the most important work that we did.
"The spirit of the squad has been great and most important. Without that spirit in the group, the confidence will not be there and it is impossible to win."
England's next game is not until the end of March when they face Slovakia in a Wembley friendly and he is taking in plenty of Premier League action in preparation.
He said he had been impressed by Aston Villa trio Ashley Young, Gabriel Agbonlahor and James Milner.
"These players are the future, and it is a bright future," he said.
ENGLAND FANS! Check FourFourTwo.com’s ever-expanding interviews section for more stuff to read:
One on One Kevin Keegan, Sven-Göran Eriksson, David Beckham, Michael Owen, Paul Gascoigne, Ian Wright
Web Exclusives Gary Lineker, Paul Gascoigne, Glenn Hoddle, Wayne Rooney,
Q&A Fabio Capello, Steven Gerrard, Wayne Rooney, Theo Walcott
Perfect XI Ian Wright
Boy's A Bit Special Theo Walcott, Gabriel Agbonlahor, Michael Mancienne, David Wheater
Ask A Silly Question Sir Geoff Hurst, Alan Ball, Bryan Robson, Peter Crouch, John Barnes, Peter Reid,
My Secret Vice Jimmy Bullard
What Happened Next? Carlton Palmer
Perfect XI Sir Bobby Charlton, Graham Taylor, Bryan Robson
