He said: "Everyone will lift their game against us. I'm under no illusion about that.
"I know how I would play against the world champions. I would be at their throats from the start.
"The game gives us the chance to set our standards again after the World Cup. This is our first match as world champions and every team will be looking for us.
"Everyone in the squad realises the rugby world will be watching England but hopefully we have the experience and ability to handle it," he added.
Italy once again go into 2004 in their customary position as outsiders but Dallaglio has no intention of underestimating the problems they will pose.
"They had a difficult time during the World Cup in that their schedule gave them a big mountain to climb," he said.
"But for those of us who have been playing against their provincial sides in the European Cup competitions their improvement is there to see. Their results are getting better and better.
"Physically they provide the sternest of tests. In all the games I have played against Italy we have had to make an enormous amount of tackles. They have the ability to keep hold of the ball and put you under pressure."
One England player who will be desperate to impress his new captain is scrum-half Andy Gomarsall.
His promotion to the RBS 6 Nations starting line-up is a reward for outstanding form in Gloucester colours since returning home from England's World Cup triumph Down Under.
"Obviously, when I saw the team selection for Sunday's game I was very chuffed. There is such huge competition for places, that I was surprised, but I've worked hard for this," he said.
"There was a quick sigh of relief, but then immediately, it was a case of knowing what I have got to do, so let's get on with it."