Recovering from ACL surgery last August, Spanish wing-back Otto has played in each of Wolves’ last three games and impressed.
The 26-year-old has also been handed a new contract until 2025, and Thompson – who made 451 appearances and scored 45 goals in his time at Molineux – said: “He has given Wolves that balance again.
“Fernando Marcal and Rayan Ait-Nouri have both played there but when Jonny is there, you know he is very defensively sound and also helps going forward.
“He just shows you the quality he’s got, with the way he goes about things and his positional sense as well.
“The medical staff did a brilliant job getting him back in as soon as they did.
“He’s not played a full game yet, but the fitness levels are there, and that shows you the character he is.
"He’s put the work in to get back as soon as possible. So, he’s one of the big players for Wolves.
“We needed him back as he brings so much quality to the team.”
Thompson also feels Otto’s return could help bring out the best of Nelson Semedo – having had a mixed time since arriving from Barcelona last summer – on the other side.
“We’ve changed formations and weren’t great, but we’ve gone back to the three – and that formation probably suits Semedo,” added Thompson.
“He still hasn’t been in the country that long. He came from a big club in Barcelona but the Premier League is a different thing, and he’s found it difficult at times.
“But there’s no doubting he’s a quality player as well. With being a bit more stable, and Jonny playing regularly, that’ll hopefully help Semedo now.
“It’s about getting that consistency and if those two stay fit, it should put Wolves in good stead for the future.”