Lions chief Sir Clive Woodward is in the final stages of formulating his Test team plans, and he confirmed that the Sale Sharks fly-half has mounted a strong challenge.
"Charlie will be seriously in the Test mix - he had a great game against Taranaki last week," said Woodward.
"It's a big game for him at the weekend in terms of massive competition from Jonny Wilkinson and Stephen Jones.
"You just want to have a look at these things. It's a big game for all the players, and I think the Otago team is, by all accounts, a step up from the Wellington match."
Hodgson endured an erratic RBS 6 Nations campaign with England last season but the 24-year-old is prospering amid the highly-competitive Lions environment, thrusting himself into contention for a Test role.
"There is not a single player who hasn't really pushed himself forward," added Woodward.
"Everyone is making it very difficult, which is what you want, and the players have understood because they have seen the intensity of the games and why we have had to kind of move the Lions to a new level.
"It is not a case of scratching my head, I am happy where we are up to. We are in good shape now, and if we can stay injury-free, I think we have got half a chance."
Several players - Josh Lewsey, Brian O'Driscoll, Gavin Henson, Dwayne Peel, Gethin Jenkins, Julian White, Paul O'Connell and Martin Corry - are strong contenders for Test match places against New Zealand in Christchurch a week on Saturday.
And although the line-up to tackle Otago is much-changed from the one which accounted for Wellington in midweek, Hodgson, his half-back partner Chris Cusiter, full-back Geordan Murphy and flanker Martyn Williams are realistic Test 22 challengers.
"It's not a science, you have just got to use some common-sense and look at every individual player. I believe if we get our preparation right between now and the Test match, we will be in as good a shape as we can be," Woodward said.
"The whole aim has been to make sure when Brian O'Driscoll runs out next Saturday, he's got behind him a very well prepared, fresh team. I think I am on course to deliver that.
"You are always going to get situations when players are going to be disappointed, but there is still plenty of rugby left in this tour to try and stake a claim for the Test team.
"Things have changed. This is not like the old days - every single team we play is incredibly physical and incredibly tough, and in my opinion, you can't ask players to play more than once a week on a regular basis."