Hamilton won the F1 Drivers’ Championship in 2017 for the fourth time in his career.
The Mercedes driver finished way ahead of Sebastian Vettel in the world title battle.
It was Hamilton’s third championship win with Mercedes, having also claimed the title in 2008 with McLaren.
Newey has watched the Brit’s development one rate years and reckons 2017 was his best campaign to date.
“I think his early championships were a bit up and down,” Newey told Sky Sports.
“But the championship he’s just put together this year was without doubt, in my opinion, his best one.
“He’s put together such a strong campaign, there haven’t been any weak races.
“He’s known when to battle and when to let a position go rather than taking himself out.”
Hamilton won 10 Grand Prix races this season and was second on four more occasions.
He wasn’t forced to retire in any race – the first time he has gone through a season without a withdrawal.
Hamilton recently appeared on Italian TV – where he played the piano in front of a live audience – and also discussed his friendship with MotoGP great Valentino Rossi.
“When I ride a motorcycle through Monaco, I feel a bit like Valentino,” he told Che Tempo Che Fa presenter Fabio Fazio.
“I’m his friend, he’s the one I like the most.”