Defoe has been sidelined for a month after hobbling off against West Bromwich Albion, since when his side have risen above Chelsea to third place in the Premier League thanks to an incredible burst of scoring by Wales winger Gareth Bale.
Victory over Arsenal at White Hart Lane would put Tottenham seven points clear of their neighbours in the race for Champions League qualification with 10 games remaining and the return of England striker Defoe would be a huge boost.
"Jermain trained with the team the last two days and so hopefully he will be available for selection if he trains again tomorrow," manager Andre Villas-Boas told reporters at the club's training ground.
"He's definitely a contender for the game."
"For a player to develop to his full potential it can happen in this league because it's the best in the world and Gareth has that in mind," Villas-Boas said.
"We want to keep our biggest assets to achieve our objectives. This season it's to reach the Champions League and next season you never know what team we can build if we achieve that."
"We don't plan for anybody," the Frenchman explained. "He is not a subject of our worries for the next two or three days.
"We just want to prepare. We have great players in our team and it would be a complete mistake to focus on any player from Tottenham."
Villas-Boas said the result of Sunday's game at White Hart Lane would not necessarily prove decisive.
"It won't be decided this weekend, even seven points is still recoverable for a team like Arsenal," he said. "It's very tight bearing in mind the amount of games there are still to be played.
"But we know the importance of the fixture and how it can impact the mood of both clubs. There is a pressure on both sides for this game. It will be a special one."
"It's difficult because City have the experience of winning the league [last year] but they have to come to White Hart Lane and if we receive them still within a margin of five points then we can be a threat to them," he said.
"But our focus is on the gaps to the teams behind us more than anything else."
