After making his debut away to Sweden in 2012, Sterling, 19, was left out by England and his club but since being restored to Liverpool's first team he has again impressed Hodgson.
"He lost his place for a while and wasn't on the radar to quite the same extent," said Hodgson. "Then I was very impressed with him in an England under-21 game and since he got back into the Liverpool team his form seems to be going up and up."
England seem certain to be without injured Arsenal winger Theo Walcott for the World Cup but Hodgson believes they are "awash" with potential replacements.
As well as Sterling, he mentioned Walcott's club mate Alex Oxlade-Chamberlain, Aaron Lennon (Tottenham Hotspur), Adam Johnson (Sunderland), Wilfried Zaha (on loan to Cardiff City from Manchester United) and Nathan Redmond (Norwich City).
Another youngster who has forced his way into contention is 18-year-old Southampton left back Luke Shaw, now challenging the more experienced pair of Ashley Cole, who has not been playing regularly for Chelsea, and Everton's Leighton Baines.
"I'm satisfied with the two left backs I've got but I also think that Luke Shaw is a player who could quite easily play for England today," Hodgson said.
The England manager, who has travelled to Brazil to inspect facilities in Manaus where his side start in Group D against Italy on June 14, is expected to name Sterling and Shaw in his squad for the friendly at home to Denmark on March 5.
(Reporting by Steve Tongue, Editing by Ken Ferris)
