Perhaps The Pilgrim's Progress, by John Bunyan is not considered a true novel by the standards of the time it was written, as the answer above argues; however, it does contain all the characteristics of a novel as defined by today's standards.
It is true that The Pilgrim's Progress is an allegory, which means that all the places and people serve a symbolic purpose. It is also true that there is a lot of what might be considered "preaching" by some readers and the language is unwieldy and antiquated, but these do not preclude the work from being considered a novel.
First, it is written in prose form. Portions do look a bit more like poetry than prose (“a man there was, though some did count him mad, the more he cast away the more he had"), but it is a work of prose.
Second, it is a narrative, which means it tells a story. If it tells a story, it must also contain the elements of a novel: exposition, rising action, falling action, climax, falling action, and resolution. Christian starts somewhere, goes somewhere, has trouble along the way, experiences a moment of catharsis, and finishes his journey.
Third, though the characters and places are obvious allegories, they are still characters and places. The cities Christian and his wandering friends visit each have their own distinct qualities, and different things happen in each place Christian visits. Characters and settings are important aspects of a novel.
Fourth, the story contains conflict. Christian's family is not happy that he has left, and of course Christian faces many temptations (in the form of people and places) throughout his journey. Without conflict, the narrative fails to move effectively; this work has constant conflict from the very beginning of the work.
Finally, Bunyan's work has a clearly developed theme which culminates in Christian's arrival at Celestial City. At the Cross, one of the most obvious symbol;s in the writing, Christian's burdens are removed forever; this is in keeping with the theme and allegory, but it also moves the plot forward.
“…just as Christian came up to the Cross, his burden loosed from off his shoulders, fell from off his back, and began to tumble down the hill, and so it continued to do till it came to the mouth of the sepulchre. There it fell in, and I saw it no more!”
Perhaps The Pilgrim's Progress is not a novel in the strictest sense of the word as it was defined more than a hundred years ago, but it does contain all the major elements we have come to expect from a novel by today's standards.