The Nazionale never calls upon players who are banned at club level but he pointed out that the striker's suspension ended at the weekend
The Azzurri coach never selects players who are serving a suspension at club level, so there was some speculation that their enigmatic forward, who has just completed a three-game ban in Serie A, might not be called up for the Nazionale's final two games in Group B.
However, Prandelli has explained that there was never any doubt over whether he would name Balotelli in his squad, not least because he wants to get the forward in the right frame of mind for the World Cup.
"I called him up because our way of dealing with problems is looking in someone's eyes in the dressing room," the Italy boss told reporters on Monday.
"I want to look in his eyes and make a pact with him that we must also arrive psychologically prepared for the World Cup.
"When you have a certain attitude, it's because you are a fragile person. Obviously, he upset me, but I'm like all the people that love him: I want to help him to become balanced. He is potentially one of the best players we have.
"Also, when you have a player that has been banned, I don't want to punish a player that's already been punished.
"If there had been a midweek round of games, I would not have called him up. I have never called up a banned player.
"So, while everyone can speak about the code of ethics, that's not my problem. The rules are clear, he is no longer banned, so I don't see the controversy."
Italy, who have already sealed their World Cup place, face Denmark in Copenhagen on Friday before hosting Armenia four days later.