Foden struck in last night's 3-3 draw at Real Madrid in the first-leg of their Champions League quarterfinal.
Waddle told BBC Sport: "He's a big part of Manchester City. He scores goals, simple as that. The guy is very positive, he tries to do things and he looks forward, he doesn't just keep possession. He fits into the team.
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"His goals are so important at the minute because (Erling) Haaland isn't really firing.
"(Antonio) Rudiger had him in his pocket tonight. It must a be a concern because City are dominating for long periods, but it is Phil Foden who is popping up and getting the goals."