Cardiff will join Swansea in the top flight after securing promotion from the Championship with last night's 0-0 draw against Charlton.
And victory over Burnley on Saturday would see Cardiff claim the Championship title, although two further opportunities would present themselves against Bolton and Hull should City not win at Turf Moor.
Former Everton goalkeeper Southall, speaking at a Football Pools event, said: "For a Cardiff fan, for the number of times they have nearly got there, it must be the sweetest night they have had.
"It is brilliant (having two Welsh Premier League clubs), and if we can get a hat-trick with Newport or Wrexham being promoted (from the Conference) that would be even better.
"That would probably be the best season Welsh football has ever had. I can't remember a time like it.
"We have two Premier League clubs - you would have to be stoned or bladdered to put a bet on like that a couple of years ago.
"One has been shown to have a good manager and good strategy in Swansea, and one has had some troubled times and have come through it and deserve to be in the Premier League."
Southall, who won 92 caps during a 15-year international career, believes there could ultimately be spin-offs for the Wales national team, although that might take time.
"It may have a good effect if people in Cardiff want to play, but it may have the opposite effect - people have less patience in the Premier League and want success straight away," he added.
"It would be nice if they could get some home-grown players. But I am not expecting a massive turnover, although I am sure they will buy for what they want to achieve.
"In fairness, if you ask a Cardiff or Swansea fan if they would rather have a good Welsh player or a super-duper foreign player, I think they would go for a super-duper foreign player.
"I think once they can build up their money - and they both do well in the community - they could make some improvement in the youth systems.
"I think they will do that, but in the past they have both been short of money. Hopefully, the money will go to that and they will produce their own in future."
Southall also praised City owner Vincent Tan, who led Cardiff's change to red shirts from traditional blue this season, a move that caused its fair degree of controversy.
There was also speculation about a possible name change for Wales' capital city club, but billionaire Malaysian businessman Tan has dismissed that notion.
"You can say what you like (about Tan), but the fellah has got success," Southall said.
"They could come out in jockstraps and people wouldn't give a monkey's if they got into the Premier League. Some of the die-hards won't go back, and that is a shame because they won't see Premier League football.
"I can understand the shirt thing, but at the end of the day the most important thing was getting the club where it should be.
"If they had failed it would probably have been seen as the manager's fault, not the shirt's fault. But playing in red in Wales isn't such a bad thing is it? I don't think it was a major issue."
The Bluebirds have topped the Championship since late November, underlining their dominance, but manager Malky Mackay has stressed how much hard work went into City's most successful league campaign since 1960.
"Being top brings its own issues," Mackay told the club's official website.
"You are there to be chased, shot at, ignored, criticised and looked over, but I have to say within the camp the group have stayed focused.
"They have listened to myself and the staff about how to go about this. You prepare properly for each team, you respect them. The minute you stop doing that is when you start losing in this league.
"Every team we have played in the last 20 months we have been competitive against. We've won some and lost some, but we have competed against all of them, and this will not change in the Premier League."