The BJP did not have a line on a prime ministerial candidate but Modi was fit to be prime minister, she told reporters in Vadodara.
"He is capable, there are no two views about it," said Sushma Swaraj, the leader of the opposition in the Lok Sabha.
Sushma Swaraj, who is also seen as a contender for the BJP's prime ministerial candidate, said that the party would win the two-phase Gujarat assembly polls to be held Dec 13 and 17.
Her comments are likely to come as a boost for Modi amid questions in the party on giving a second term to BJP president Nitin Gadkari.
Gadkari is facing a probe over financial dealings of his Purti Group.
BJP leaders have maintained that a decision on the prime ministerial candidate will be taken at an appropriate time. Some of them have indicated that it may be decided after the 2014 Lok Sabha polls.
Apart from Modi and Sushma Swaraj, Arun Jaitley, leader of the opposition in the Rajya Sabha, is also seen as the BJP's prime ministerial candidate.
BJP MP Shatrughan Sinha had said last month that party leader L.K. Advani was the best candidate for prime minister.
Party sources in New Delhi said that this is first time that a leader, considered a competitor of Modi for the choice of prime ministerial candidate, had praised his qualities for the post.
They said that the issue of a prime ministerial candidate was open but Sushma Swaraj's comments could be interpreted as a pointer to Modi's possible emergence as a favourite for the role.
