Waugh felt Smith was improving at No.3, and likened his appetite for run-making to Sachin Tendulkar's. "I don't mind him batting at number three. He is improving all the time," Waugh, who is in India to launch his company's property portal, told ESPNcricinfo.
"His last year has been quite phenomenal. His technique will tighten up a bit. But, he has got a great eye and he has got good placement of the ball. Never seen a batsman hit the gaps as well as he does."
Smith first moved up to No.3 against West Indies in June and has since amassed 791 runs in 13 innings at an average of 71.90. He has scored three centuries, including a double-hundred at Lord's and a 199 in Kingston.
"He has got really good hands and that compensates perhaps for his footwork not being as sharp as some of the other players," Waugh said. "He is not technically a perfect player, but he has got that inner desire more to score runs, a bit like a Tendulkar. Once he gets a hundred he wants to go on and get a big score every time."
Waugh said Smith the captain needed to find his own leadership style - one that perhaps conformed to his batting philosophy. "I think he's pretty much an aggressive batsman with a good mindset. I think he takes it into the captaincy as well. He loves batting, he loves scoring runs and the other guys they like his leadership, they follow what he is doing.
"Allan Border was a leader by what he did on the field; he led by example. Mark Taylor was more of a talker. I guess I was a pretty aggressive captain. We tried to win at all costs. And then you have got Michael Clarke and Ricky Ponting. But he [Smith] has got to do it his way. He can't copy what I've done or what Mark Taylor has done or Ricky Ponting. He has got to find out what his style is."
Smith's golden run, though, has not altogether rubbed onto Australia, who trudge through a difficult phase marked by the Ashes loss and the retirement of players like Clarke, Chris Rogers and Brad Haddin. In two of their three defeats against England, they lasted no more than three days, which included an embarrassing capitulation for 60 in the first innings at Trent Bridge.
Waugh admitted Australia needed to "mature" as a Test side. "We are very good on flat wickets at the moment, but when the ball turns or if there is a bit of swing we seem to be struggling as a batting unit. That's all about just working a little bit harder, and putting more value on your wicket," Waugh said.
"I think Indian batsmen do that very well. Australians, we have got to learn to do that, and perhaps it's about acknowledging the tough moments in the game where you just got to get through whichever way you can. And, it's ok to lose a session, but you can't lose it disastrously. You can't lose seven or eight wickets. That is what the team's been doing. "
Waugh, however, believed Australia, with quality personnel at their disposal, would bounce back soon. "We won't be far away. We have got an exceptional crop of young bowlers who, when they get their maturity and strength together, will be able to take 20 wickets.
"The batsmen will come through. I think Usman Khawaja will have a good year this year. He has not picked as yet, but I believe he is a quality Test player. I think Joe Burns can do well. We just need people like the Marsh brothers to lift a bit because they have got a lot of talent. If they can do that, along with Smith and [David] Warner and some other players, we won't be far away."
Arun Venugopal is a senior sub-editor at ESPNcricinfo