The 23-year-old made his 100th Gunners appearances in Saturday's 4-1 home win against Reading and, despite an injury-hit season, has improved vastly this term.
"I think this season has been, despite the fact that he was in doubt for a while, a step up season for him," Wenger said.
"He has improved a lot, has put his personality into the games, which was sometimes a bit of a problem for him.
"He has authority, he is decisive going forward, and in games where we were struggling a bit like Swansea in the cup he turned up and was the one who brought the pressure on the opponent.
"Even at Munich when he had been out for six weeks he came straight back in and had a very decent game. For me he has moved into the top three left-backs in the country."