Madrid are sitting in third place, five points behind leaders Sevilla and two behind champions Barcelona, who have a game in hand.

But they have lost two of their last three league games and their last outing was a dismal 3-0 home defeat to tiny Recreativo Huelva.

That sequence began with a crucial 2-1 defeat at Sevilla before Real edged Espanyol 1-0 away.

But Capello is still happy and confident his team can deliver their first championship crown in four years.

"We are having a good season even if we are short of a few points," he said in an interview published in Sunday's edition of Marca.

"After playing Barcelona, Valencia and Sevilla, I realised we are a good team that can win the title."

Real beat Barca 2-0 at home before triumphing 1-0 at Valencia earlier in the season. Both were expected to be their main title rivals although injury-ravaged Valencia have since slipped well off the pace with UEFA Cup holders Sevilla the surprising pace-setters.

Despite their recent blips Madrid, who finished second last season, are much better placed than they were a year ago.

When the league broke for the winter break last year, Madrid were fifth and 11 points off the top.

And the Italian coach has already boosted his squad ahead of the January transfer window with three promising new signings from South America.

That will give him even more of a selection headache as he already admitted after the Recreativo game that he did not know what his best side was.

"I didn't know what to do from the bench," he said. "For the moment I have no idea who should start."

Having added Brazilian fullback Marcelo, Argentine midfielder Fernando Gago and Franco-Argentine forward Gonzalo Higuain -- all highly-rated young players -- Capello's selection headache will hardly improve.

Although that is a problem he is relishing.

"They are three important signings; they're coming to play in the first team; they are good and have the future ahead of them."