The Magpies go into Thursday night's quarter-final second leg with Benfica at St James' Park 3-1 down after being well beaten in Lisbon.
The only team to beat Benfica by two clear goals this season are Barcelona, who won 2-0 in the UEFA Champions League back in October.
Three weeks later Benfica lost to Spartak Moscow - and since then they have not tasted defeat in 31 games in all competitions.
Pardew said: "There's only one team which has beaten them by two clear goals, and that's Barcelona, so that's the size of the task, so we are under no illusions there.
"This is a Champions League team, really, and if it weren't for Celtic's fantastic performance in the group, they could have been competing in the Champions League.
"That's the quality we are up against. I don't think there are going to be many better sides that have played here than Benfica.
"They have a slightly different style to a Premier League team. They have some fantastic technical players - Gaitan, Rodrigo, Cardozo and Lima.
"They have a real, real threat on the counter-attack, and the game could get away from us - it could easily get away from us - so we have got to be very much on our guard that we approach it in the right manner, give ourselves a chance and try to get us to the end of the game in a position where we can get it back.
"I would still feel confident two goals down with 10 minutes to go, the way that we are and the potential we have in the group, and the way I can affect it off the bench."
Pardew will have of France international Hatem Ben Arfa back from injury and he looks likely to be on the bench.
Pardew said: "Hatem Ben Arfa has made an unbelievable recovery - he will be involved.
"I am sure if he is needed, he will be somebody who can turn the game, so I have assets that have come to me maybe just in time."