The former captain has been recalled to the 24-man group for the matches against Moldova and Ukraine, with Manchester United duo Michael Carrick and Tom Cleverley retaining places
Terry is currently facing a Football Association investigation regarding allegations that he racially abused QPR defender Anton Ferdinand last season, and had been left out of the squad for the friendly against Italy.
The Chelsea captain, along with Liverpool skipper Gerrard, returns to the fray, but Manchester United duo Wayne Rooney and Rio Ferdinand miss out due to injury.
Goalkeepers Jack Butland and John Ruddy, who both made their senior debuts against Italy, are included in the squad once again behind regular No.1 Joe Hart.
In defence, youngsters Ryan Bertrand and Kyle Walker join established internationals Terry, Ashley Cole and Joleon Lescott, while in midfield Tom Cleverley retains his place in the 24-man group after impressing against Italy.
Michael Carrick retired from international football, Hodgson claimed, ruling him out of involvement at Euro 2012, but has returned to the national team since the conclusion of the tournament and will travel with the Three Lions again here.
In attack, Andy Carroll has been selected despite his limited game-time for Liverpool alongside Jermain Defoe, Danny Welbeck and Daniel Sturridge.
Goalkeepers: Jack Butland (Birmingham City), Joe Hart (Manchester City), John Ruddy (Norwich City).
Defenders: Leighton Baines (Everton), Ryan Bertrand (Chelsea), Gary Cahill (Chelsea), Ashley Cole (Chelsea), Phil Jagielka (Everton), Glen Johnson (Liverpool), Joleon Lescott (Manchester City), John Terry (Chelsea), Kyle Walker (Tottenham Hotspur).
Midfielders: Michael Carrick (Manchester United), Tom Cleverley (Manchester United), Alex Oxlade-Chamberlain (Arsenal), Steven Gerrard (Liverpool), Adam Johnson (Sunderland), Frank Lampard (Chelsea), James Milner (Manchester City), Theo Walcott (Arsenal).
Forwards: Andy Carroll (Liverpool), Jermain Defoe (Tottenham Hotspur), Daniel Sturridge (Chelsea), Danny Welbeck (Manchester United).