Faletau has endured a fitful season because of injury, but showed signs of a return to form in Bath's European victory over Brive last weekend.
"I think he's one of the best number eights in the world," Blackadder said.
"I think he will be a Lion, I really do."
Ex-back-five forward Blackadder, who won 12 All Blacks caps, told BBC Radio 5 live: "[Lions coach] Warren Gatland knows him really well and knows what he is capable of.
"You can feel the switch has been flicked and we are only going to see fantastic rugby from him."
Faletau returned from his second knee injury of the season in the 2017 Six Nations, but was unable to oust Ross Moriarty from the starting back row.
"I think he has had a tough year to be honest," Blackadder said.
"Things haven't quite gone his way. When he did play for us we weren't exactly firing, and then him getting his injury and not getting a lot of time for Wales.
"But I thought there was a mindset shift last week. He looked like he was back in the groove."
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Faletau started for the Lions in the decisive Test against Australia in 2013, but faces competition this time around from the likes of England's Billy Vunipola, his childhood friend.
However, Blackadder is excited about what is to come from Faletau, starting in Saturday's crucial Premiership clash with Leicester at Twickenham.
"We are only going to see fantastic rugby from him," the Kiwi added.
"He's only getting better. Last week [against Brive] was just an appetiser of what he is capable of, and I thought he was pretty special last week."
Wales number eight Taulupe Faletau is "back in the groove" and is set to tour with the British and Irish Lions this summer, according to his director of rugby at Bath Todd Blackadder.