Congratulations! If you have been asked to provide a potential employer with a referee to contact, that is usually a very good sign. Most employers will save this step until the end of the process, so if this is where you are at you have done very well to get this far and should feel quite proud.
Of course, you have probably been thinking about your referee for a while now. It is a great idea to think about this at the start of your job search so you have ample opportunity to brief your referee and ensure they are ready to have the conversation when required.
Your referee, or referees if you have been asked to provide two or more, should ideally be someone you have worked with previously. If possible, select someone who was your manager or held a leadership role within the organisation. Your referee/s should also be someone you have worked with recently, in the last two years if possible; this way they can provide more recent and relevant examples of your capabilities.