Lancaster, who led England through the Six Nations on an interim basis, and Nick Mallett were interviewed by the Rugby Football Union on Thursday, with deliberations expected to continue on Friday.
Smith did not apply for the head coach's job, but he is keen on a return to international rugby, having helped the All Blacks' World Cup triumph last year alongside Graham Henry and Steve Hansen.
"I assume Stuart Lancaster will get the England job. I also assume he will be able to get Andy Farrell out of his Saracens contract and keep (Graham) Rowntree on board," Smith said.
"That is what I think will happen, but it is win-win for England at the moment because I also have huge respect for Nick Mallett's abilities. I await the puff of smoke with interest."
Smith, who is seen as one of the best attack coaches in the game, has put on record his interest in working with England. He coached alongside Mallett in last year's Help For Heroes charity match at Twickenham.
Press Association Sport understands he has not had any contact with the RFU.
"I have been asked, with reference to England, if a number of strong coaches can work together," Smith wrote in a blog on www.therugbysite.com.
"It can work, but your beliefs and philosophies need to be aligned.
"Could I work with Lancaster? I don't know the man, I like where I am at the moment, but I respect what he has achieved. And is that question the right way round?"
Smith praised the work Lancaster did during the RBS 6 Nations in rebuilding the England team following their failed World Cup campaign.
But he believes the next step in England's development is to create an attacking system that would test the best teams in the world.
"Stuart Lancaster has done a hell of a job in his short time as national coach," Smith said.
"If I was an England supporter I would be pretty excited.
"But Lancaster will know that as far as England have come, they will have to keep improving if they are to compete with the southern hemisphere.
"I think that they play South Africa four times, New Zealand, Australia and Fiji before the end of the year. They won't beat those sides just smashing the ball up. They will need an attacking strategy by then and they will need alignment with all the coaches and players."