The 20-year-old defender lasted just 10 minutes in Amsterdam on Friday before succumbing to injury, with Harry Maguire replacing him.
While Jack Wilshere had been forced to leave the squad due to injury, there was hope Gomez would be able to feature against the Azzurri at Wembley.
However, the damage has been deemed serious enough to require further assessment by Liverpool's medical team as they head into a crucial stage of the season both domestically and in the Champions League.
A statement released by the England camp read: "Joe Gomez has withdrawn from the England squad and returned to Liverpool for further assessment by his club's medical team.
"It follows an ankle injury sustained during the Three Lions' 1-0 win over the Netherlands on Friday.
"There are no plans at this stage to call in a replacement ahead of Tuesday's game against Italy at Wembley Stadium."
Friday's clash was Gomez's third cap, the youngster having impressed over his 29 Liverpool appearances in all competitions this season.
Upon hearing the news that a versatile performer will be returning to Anfield for treatment, the Reds said in a statement released on their official website: “Gomez will now undergo further assessment by the Reds medical team at Melwood.”
Jurgen Klopp’s side will be back in action on April 31 against Crystal Palace.
That contest, which will see them attempting to cement a standing inside the Premier League’s top four, will be followed by three crucial clashes at home and abroad.
Liverpool are currently sat third in the English top-flight, seven points clear of fifth-placed Chelsea but having played a game more than those around them.
Gomez will hope to come back into contention during the business end of the season, but it remains to be seen how long he will be sidelined for.
He will also need further club outings before the end of the campaign if he is to nail down a place in Southgate’s 23-man squad for this summer’s World Cup finals in Russia.