Victory secured a 2-1 win over the Alen Stajcic-coached Wanderers in Parramatta to book a two-legged, last four meeting with the A-League Premiers Auckland FC, and Diles backed his squad to continue to progress ahead of the clash with the New Zealanders.
"We've got belief in the players," said Diles, who took over at the helm seven games into the season after Patrick Kisnorbo quit the post to move to Japan.
"They just keep getting better and better.
"We're not where we need to be yet, there's still growth in us. But now it's about getting ready for game-by-game.
"The (regular) season's done, and we've got to be in that mentality of kill or be killed. That's what it is now.
"There's no second chance. That's the mindset we need and that's what we've got to be up for next week and the week after."
Victory will host the first leg in Melbourne before travelling to Auckland for the return clash on May 24 and Diles paid tribute to the quality of the A-League newcomers, who won the Premiership in their first season in the competition.
"They won the league, deservedly because they've done a fantastic job," he said. "But the league is the league and now it's finals football. It's a different competition and we'll make sure that we're ready for that.
"There's no one we fear in this competition. We know we're a very good team with great players.
"So are Auckland, and so are the Wanderers, they're a fantastic team. You just look at their bench and players that weren't even in the squad. Fantastic team. To beat them here is a huge achievement."