Henry coached Cipriani in the Barbarians' defeat to Australia on Saturday in what was the fly-half's first game at Twickenham since November 2008.
Cipriani hasn't played for his country since defeat to the Wallabies three years ago but Martin Johnson's resignation as England team manager has led to speculation that he could be back in the international reckoning sooner rather than later.
The ex-Wasps playmaker moved to the Melbourne Rebels in the summer of 2010 and, although he has recently told this website of his desire to play for the Lions in 2013, his England career appeared to be over while Johnson remained at the Rugby Football Union.
But Henry, who coached the Lions a decade ago, feels Cipriani has served his punishment following a series of high-profile incidents and should now be given another shot to impress on the big stage.
"People deserve a second chance," said Henry.
"We don't want to hang him for previous offences. He's done his time. Now give him a bit of space and see how he responds.
"I think he's got good natural skill and he's got some confidence in his own ability. I was talking to [former All Black] John Gallagher who thinks he's got tons of ability."
As well as promoting Cipriani's chances of an England recall, Henry had his say on Johnson's departure and the controversy surrounding last week's leak of confidential information following the Professional Game Board's review into England's disappointing World Cup campaign.
Having experienced plenty of media negativity after his All Black side were knocked out of the 2007 World Cup at the quarter-final stage, Henry was particularly scathing of the press coverage of the World Cup controversies and the post-tournament treatment of his 2001 Lions skipper
"It makes me sick, quite frankly," added Henry.
"I just see the headlines so I don't bother to read it. I've been there before myself. England got beaten in a quarter-final, people are annoyed that they're on their way home and they're not going to be happy. I thought it was sad that that veered into the press.
"I've got a lot of time for Martin and I'm sure he's finding that very difficult. He'll be very frustrated. There's nowhere to hide."