but written off by many pundits and fans.
Australia sacked coach Mickey Arthur a little over two weeks ago, were hammered 4-0 by India in their most recent test series and have been hindered by outbursts of ill-discipline from members of the squad.
The retirements of world-class batsmen Ricky Ponting and Mike Hussey has left a fragile batting lineup and Waugh said the right attitude under Clarke and new coach Darren Lehmann could prove a critical factor.
"A team will be a reflection of its leader and as such, Clarke needs to be energised without being over the top, focused but also open to improvisation, but above all, controlled and authoritative under pressure," Waugh wrote in News Limited newspapers on Wednesday.
"What we did well back in 1989, and must be emulated by Clarke's men, is to play the 'Aussie way'.
"This means backing yourself in all situations, attacking rather than retracting, exuding positive body language, hustle when running between the wickets, exhibiting energy in the field and batting and bowling in partnerships.
"They must display an element of 'mongrel' in the play and not back down when confronted," Waugh, added, using the classic Australian term for aggression.
"They must claim the high ground and put their flag well and truly in the turf."
Waugh, who had the fortune of playing alongside all-time greats like Ponting, Shane Warne and Glenn McGrath, won 28 of his 46 Ashes tests and lost just eight.
He was also a member of the unfancied 1989 side in England, who took the six-match series 4-0, kicking off nearly two decades of dominance over their traditional rivals.
"Back in 1989 we began the series by being labelled the worst touring team ever to contest the Ashes, but what these experts hadn't factored in was the unbreakable team bond that we formed as we journeyed up and down the motorways," he added.
"Each victory gave us strength and belief but the number one factor for all of us was the enjoyment we got from seeing our mates succeed and the notion that the team always came before the individual."