Southgate announced his latest choice during his news conference on Monday ahead of the Wembley clash with the Azzuri.
Joe Hart remains England's most experienced goalkeeping option but Everton's Jordan Pickford was selected in the 1-0 win against the Netherlands in Amsterdam on Friday and now Butland will get his chance to stake his claim.
Burnley's uncapped Nick Pope is also in the squad.
News that makes sense
Your trusted source for staying up-to-date with the world around you. Get free daily news updates and analysis, straight to your inbox.
"No (Pickford) didn't (do anything wrong against the Netherlands on Friday)," Southgate said. "At the beginning of the week we decided that's what we were going to do, give them both a game for the experience.
"We have stuck with the plan right the way through and there is no reason to come away from that.
"Lots of positions of the field we have really good options. It's important we have competition for places all over the pitch. That breeds good performance."
Butland made his England debut against Italy in 2012 but has earned only five caps since. He was ruled out of Euro 2016 after fracturing his ankle in March of that year.
The 25-year-old has made 28 appearances in the Premier League this season for relegation-threatened Stoke, keeping five clean sheets and conceding 51 goals.
Pickford has let in 50 for Everton this season, keeping seven clean sheets in 31 Premier League games, yet both he and Butland appear to be edging ahead of Hart, out of favour at West Ham United, in the race to get the goalie jersey in Russia.
While the 101 goals Pickford and Butland have conceded will be a worry for those questioning the quality at Southgate's disposal, they both stack up well in the 'saves made' charts.
According to Premier League statistics, Butland leads the way this season with 112 to third-placed Pickford's 103.
However, Southgate did not rule Hart out of starting against Tunisia in England's first match in Russia on June 18.
"Joe's professionalism has been brilliant, he has always performed well for us and we had the best defensive record in Europe in qualifying," Southgate said.
"Even though he knew he wouldn't be playing in the games this week he has been a fantastic influence to the rest of the players and the other keepers."
(Reporting by Martyn Herman; Editing by Christian Radnedge)
