And he is keen to stress he has admiration for Jermain off the pitch as well as on it - a respect first forged when J was at Bournemouth and Peter was there.
"He has been fantastic; he was at Bournemouth for a year and he was outstanding, not just on the pitch where he scored 18 goals but the way he conducted himself was a credit to West Ham," says Peter, who learnt man management under no less than 10 managers at Celtic, not to mention Jock Stein, Andy Roxburgh and Craig Brown for Scotland.
"I spoke to him on the first day I came to West Ham and said 'while you are here, be the best you can be' because that will benefit both of us, him and the club.
"Jermain could play for Real Madrid because he has got that knack and if you give him a chance he will bury them."
With the transfer deadline for the Premiership coming to a close today Peter is delighted that, despite constant and unfounded speculation, he is still at the club.
"We have to make sure we get the best out of him while he is here - and hopefully that will be a long time," says Peter.
"He was never a sulker in the year I worked with him and we left him out at times even at Bournemouth - people tend to forget that.
"His attitude was spot-on and I think he has come back and watched about 12 games at Bournemouth since he returned to West Ham, which is a great credit to him.
"He was a fantastic trainer and a fantastic ambassador for the club - and what an asset to have in your squad.
"There are not many about like Jermain Defoe, that's for sure."
Speculation will of course crop up again at the end of the season and Peter adds:
"I'd love him to stay and at the end of the day the best way to persuade him to stay is to get in the Premiership.
"That is the biggest thing, and I know money is important, but at the end of the day we have got to make it as difficult as possible for him; if we get to the Premiership then we have got to sit down with him again and say 'we want you to stay - do you want to stay?"