"Shane is deservedly in the running and has a great chance of winning the award," said Habana, who comes up against Williams in tomorrow's international between Wales and South Africa at the Millennium Stadium.
"He is worthy of his nomination for the title because he had a great season.
"He won the Grand Slam with Wales, continued that through the June Tests against us and has been brilliant for the Ospreys too.
"Of course, Dan Carter has also had a great season which makes it tougher and I'm sure it will be a close call but Shane's been great to watch."
Williams and All Black pivot Carter are joined on the IRB shortlist by Italian No8 Sergio Parisse and two Lions captaincy contenders Ryan Jones and Mike Blair, with the winner to be announced in London on November 23.
Williams has enjoyed a superb 2008, scoring 14 tries in his last 11 Test matches, including six in the 2007 World Cup and another half dozen during the Six Nations triumph to become his country's all-time top finisher with 43 Test tries.
Current IRB World Player of the Year Habana has admitted playing against the likes of Williams during the 2009 Lions tour is already on his mind, although the impending clash with Wales takes centre stage this weekend.
"Our only focus is this series and facing Wales on Saturday. Obviously, the results and performances on the tour will be vital for us ahead of playing the Lions," said Habana.