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.
"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."
"Well, we've still got three months left," he said.
