The Italian's shock departure came on Wednesday night, and was immediately met with a flurry of speculation over who should replace him, with Tottenham's Harry Redknapp the noticeable favourite.
"If Harry didn’t want it and Spurs weren’t willing to let him go I would give Terry Venables a shot again. With a shadow of a doubt. The man is just an unbelievable manager," Gascoigne told Sky Sports.
He added: "[Redknapp is] a great bloke. Everyone would love him as the England manager because he is a player's man. Everyone would want to play for him and he’s proved that at the clubs he's been to. Fantastic manager. He’s like Terry Venables. Harry’s a similar type of bloke.
"[Capello's resignation is] a massive shock to everyone especially with the European Championships just around the corner.
"They’ve still got time to get a manager in and get the team that he wants but, I think, with that John Terry position you could see that [the resignation] around the corner.
"As Sir Alex Ferguson said 'the most important person is the manager'. I know as an England player the squad that he’s got – half of them will be quite pleased and half of them undecided. It’s a massive thing."
Venables was boss of the national side while Gascoigne was still playing between 1994-1996, covering the Euro 1996 tournament where England were knocked out at the semi-final stage by Germany on penalties.
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