After a strong start to the season, City have dropped to third in the Premier League table with only one win in their last five matches - but despite the lapse, the Eagles' boss believes Pep Guardiola's men have what it takes to win the league.
Palace lost all three games against the Manchester side last year - twice in the league and once in the Capital One Cup - but Pardew believes they can come out on top on Saturday.
He said: "They are certainly a team who could win the title
They have a world class manager and world class players, that always helps..
"I think they would like to put this recent run behind them and get back to winning ways on a consistent level.
"Their performance against Barcelona was a highlight of the season, they can reach heights few can reach.
"I think the Spurs game in particular was a bit of a shock for them because Spurs were terrific on the day.
"We have watched most of City's games
They have the ability to win the league and hopefully we will put a dent in it."
A run of five league games without a win has not helped Palace's cause - but Pardew does not believe his team are in a relegation battle, although he is keen for a change of fortune
He said: "We need to improve (all over), there is no doubt about that
"I think the result at Burnley (a 3-2 defeat) was a big blow for us because it was a game where we played well, got ourselves back into and we got carried away thinking we should try and win the game with seconds remaining.
"I don't think that is a bad thing but we left ourselves short and that has put pressure on us, pressure we are going to have to deal with.
"We are in a position in the league which is false and we need to rectify that before we get to February.
"There are some fantastic players in our team
I am not even thinking that we are in a relegation battle, to be honest
We have just got to make sure that in the next few weeks we get some important results
"Two wins could take you to mid-table, there is a long way to go yet."
Source : PA
Source: PA