Rams boss Lampard, 41, has been given permission to talk to the club where he spent 13 years a player following constant speculation he will take over from Maurizio Sarri at Stamford Bridge.

Terry told the Daily Mail: "It is perfect timing for him and the club.

"Lamps is a legend and now is the right time for him to come home."

Terry, assistant to manager Dean Smith at Aston Villa, spent 13 years playing alongside Lampard at Chelsea.

The former England defender believes his old team-mate is the perfect fit for the job, particularly as Chelsea are banned from signing players during the next two transfer windows following a Fifa investigation into the club's recruitment of foreign under-18 players.

"Having Frank in charge and the transfer ban will give young players throughout the academy belief that there is a genuine pathway into Chelsea's first team," added Terry.

"After the season he has had with Derby and with Chelsea's transfer ban in place, there is no one better equipped than Frank to succeed at Chelsea."

Meanwhile, Derby chairman Mel Morris says Lampard's appointment as the next Chelsea manager is "not a done deal".

"As far as I'm concerned, I'm hoping this guy is going to manage us next season," Morris told Talksport.

"I'm not giving up hope on that at the moment."

In his first season as a manager, Lampard and assistant boss Jody Morris - another former Chelsea midfielder - guided Derby to the Championship play-off final, where they lost 2-1 to Aston Villa.

Chelsea approached Derby after Sarri's move to Juventus was confirmed.

What next for Derby?

If Lampard joins Chelsea, he may wish to take number two Jody Morris with him

Morris has appointed five permanent managers since becoming Derby chairman in June 2015.

Should Lampard leave, he will be looking for his sixth in just over four years.

However, Morris said Lampard's influence will have a big impact on the next appointment

"We have seen how things have come together, with a connection between academy and first team, a style of football," he added.

"To me the person we bring in if Frank moves on has to allow us to maintain the style of play.

"We want academy players in the first team as fast as possible while making sure they are good enough. A large part will be someone to keep the mission."