While the Croatian midfielder has been linked with a move to Stamford Bridge throughout the summer to no avail, the Blues are reportedly prepared to up their bid for the 25-year-old.
Despite Spurs standing firm on keeping hold of the playmaker, Miller thinks that Redknapp should cash in on Modric if the price is right.
“I don’t think anyone is bigger than the club," Miller told talkSPORT. “If they get the right offer they should sell him. It’s very difficult keeping your best players and he's shown intent to leave; he’s handed in a transfer request.
“It will be good for Spurs as well as Modric. If they can get the right cash and the right players in exchange let him go.
“There will always be a Tottenham, Luka Modric and others will come and go.”
The 51-year-old is confident that Redknapp can bring in a few new players to White Hart Lane after Modric’s departure.
“If Chelsea offer the right quality of players and the right sort of cash then take it and then go and buy another couple,” he added.
“If you can get three or four players in instead of Modric then that improves the squad. I don’t see [Modric leaving] being a problem.”
Meanwhile, Tottenham take on Scottish outfit Hearts in the first leg of the Europa League play-off tonight.