Work has begun on finding a new leader following Roy Hodgson's resignation, which he announced less than an hour after England were knocked out of Euro 2016 at the hands of Iceland in the last-16 stage.
Ferguson believes that Allardyce should be appointed as Hodgson's successor if the FA wants an English manager, but has urged the governing body to consider overseas candidates.
"It's very difficult to think of the right man and there are only three English managers in the Premier League," Sky Sports News quotes Ferguson as saying. "With Sam's experience, he is the obvious choice.
"But I think they have to search wider to make sure they get the right one. If it's Sam, fine. But they have to have someone with the capabilities, the tactical awareness and the feel for the national side.
"Thank goodness I'm not making the choice because it's a difficult one, but Sam's the best English candidate because he's in the Premier League."