Hodgson, 75, managed Watford from January to May 2022, leaving after they were relegated to the Championship.

"It is a privilege to be asked to return to the club, which has always meant so much to me," said Hodgson.

"Our sole objective now is to start winning matches, and to get the points necessary to ensure our Premier League status."

Hodgson had said he did not expect to take another managerial job in the Premier League after his departure from Watford.

Ray Lewington also returns to Palace as first-team coach with Paddy McCarthy, who took charge of Sunday's 4-1 defeat at Arsenal, named assistant manager.

"I would like to welcome Roy and Ray back to the club," said Palace chairman Steve Parish.

"We are obviously in a very challenging period but we believe that Roy's and Ray's experience, knowledge of the club and players, alongside Paddy can help fulfil the immediate requirement of keeping us in the league.

Palace are 12th in the top flight but only three points above the relegation zone following their defeat at Emirates Stadium.

Hodgson's first game in charge will be at home to Leicester on 1 April.