European champions Spain have been the pick of many pundits but Brazil will have extra motivation according to Lippi, whose world champions are outside bets to retain their title because of a lacklustre qualifying campaign and an ageing team.
"Brazil are the strongest team," Lippi told a select group of foreign reporters.
"The Brazilians will be very motivated as last time they knew they were the strongest team but lost (in the 2006 quarter-finals)."
Italy's lack of creativity has led to a wave of calls from Italians for outspoken Sampdoria playmaker Antonio Cassano and Inter Milan forward Mario Balotelli to be named in the squad.
However, Cassano's stock has plummeted since the turn of the year and he will not feature in South Africa while 19-year-old Balotelli has been dubbed the "wild child" of Italian soccer for constantly clashing with Inter coach Jose Mourinho.
Some pundits believe black Balotelli should be added to the squad to improve racial harmony in Italy but Lippi said the striker was not ready.
"Everyone knows I'm against all racism. There's only one race, the human race, but I'm certainly convinced a coach can't pick players for this reason," Lippi said.
"I'm sure when he's completed his process of growing up with Inter he'll be mature and he'll have qualities useful for the Italian team."
Lippi said Italy would find it tougher to retain the World Cup than winning it four years ago and again refused to clarify whether he would leave after the tournament despite pressure from the Italian federation.
He denied his team was too old, saying experience counted for more than youthful exuberance in a month-long tournament, and joked there was still time for a scandal to bring his players together just like the 2006 match-fixing affair did.
"Well, we've still got three months left," he said.
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