The two golfers are near neighbours in Windermere, Florida, where they regularly play practice rounds together and Atwal has been amazed by the rapid improvement shown by Woods in recent weeks.
"He's playing well," Atwal said on Monday after he, Woods and American Dustin Johnson had finished 18 holes together in cool, overcast conditions at Pebble Beach.
"His practices have been really good the last couple of weeks at home. Every day it has got better."
Asked how close Woods is to the form that earned him 14 major titles, Atwal replied: "Very close, very close.
"He feels like he is very close as well. It's just a matter of when the bell goes off if he can do it then. I think he will."
Woods, comfortably the best player of his era, has fallen well short of his own lofty standards since returning to the game in April from a self-imposed exile of five months.
With his private life in tatters following tawdry revelations of his marital infidelity and his driving wayward at best, he has missed one cut in just four starts on this year's PGA Tour.
In his first tournament back, Woods impressively tied for fourth at the US Masters but since then he has struggled.
He failed to advance to the weekend at the Quail Hollow Championship, withdrew from the final round of the Players Championship because of a lingering neck injury and tied for 19th at the Memorial tournament following a three-week break.
PERSONAL STRUGGLES
"I'm not surprised Tiger has struggled because he's been struggling with his personal life," said Atwal, a winner of seven Asian Tour titles and three events on the European Tour.
"But he's working really hard to get it back and, like he says, the more reps (repetitions) he gets out at tournaments, the better he'll get."
Atwal, who also played a practice round with Woods at Pebble Beach on Sunday, has seen a noticeable improvement in the world number one's driving accuracy.
"It's a lot better," the 37-year-old said. "In fact, yesterday was a lot better and then today got a lot better than yesterday. It's amazing the improvement."
Huge crowds followed Woods, Atwal and the long-hitting Johnson at Pebble Beach on Monday, despite surprisingly cool temperatures on the picturesque Monterey Peninsula.
Woods, wearing a navy blue sweater and grey golf slacks, was enthusiastically welcomed as he approached every green, repeated calls of "Welcome back Tiger" being met with his trademark flashing smile.
"I was pleasantly surprised," Atwal said. "It was really nice to see the warmth from the people for Tiger."
After hitting his final tee shot of the day at the par-five 18th, Woods briefly posed for photographers before setting off down the fairway.
However, he declined to speak to reporters gathered behind the 18th green once he had finished and was whisked away in a black courtesy car. In many ways, though, Atwal spoke for him.
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