The 62-year-old admits he fears the day when big clubs like Real Madrid, Barcelona, Manchester United and Chelsea face each other on a regular basis.
“UEFA need to stave off that day which I fear greatly, where there are only 12 or 16 teams playing in the world or in Europe,” said Hodgson.
“The reason why the Premier League is so good because there are still Manchester United, Chelsea, Liverpool and Arsenal playing in it.
“If you take those teams out then I’m sorry to say that the Premier League wont have the same appeal and the same in Spain and Italy if you took out the big teams.
“I think the way the way the European League are set up, particularly the Champions League, provides that perfect balance so we can all stay in our domestic competitions.
“People thought it was absurd to have a Champions League where the fourth place team got through but that’s the only way to make sure everyone in the Premier League is happy.
“Otherwise you get a situation where if only the champions get through, teams will get very upset and will threaten to break away with big TV money.”
