Stewart, a veteran of four World Cups, says that current captain Vaughan must shake off all his injury fears if England are to be successful and that they will also need Andrew Flintoff and Kevin Pietersen to fire.
"I think deep down they know they are an outside bet," Stewart told the BBC.
"I think Michael Vaughan summed it up when he called them the dark horses of the tournament."
"He's a fine player but more importantly if he plays and captains, it means Andrew Flintoff can just concentrate on his own performances and if England are to progress then Flintoff along with Kevin Pietersen have a huge role to play," said Stewart.
Another key figure for England will be wicket-keeper Paul Nixon, but Stewart believes he must give them more with the bat.
"He's got to carry on doing what he does best - that's being chirpy, making sure he gets the whole team going and firing, but from a batting point of view I just want to see him make sure he finishes games.
"By that I mean if he comes in with five overs to go and they need 30, for example, that he is there at the end. That's what he's done well for Leicestershire.
"And if England bat first he's got to make sure they post competitive totals in those last five or 10 overs when he'll be at the crease."
Australia and South Africa are Stewart's tips as the two finalists.
But he added: "My only concern with South Africa is that they haven't really got a front-line spin bowler and I think spin bowling will play a big part as the tournament goes on."