"He is a player with great potential, talent and quality," Lippi told BBC Sport. "He needs to think more about football and less about things outside football because he can really do very well.
"If I had remained as Italy coach, I would definitely have included him in my plans to rebuild the squad.
"Milan is an important team, a young team and he has always wanted to play for Milan. It all depends on him and only him."
Balotelli scored twice on his debut for Milan on Sunday, helping them win 2-1 against Udinese at the San Siro.