England's Australian coach Eddie Jones named a 24-man squad and will announce his starting XV on Friday.
Jones views Tuilagi exclusively as an inside centre and believes he can become England's version of New Zealand great Ma'a Nonu.
Tuilagi has played 25 times for England since his debut in 2011, scoring 11 tries.
Nonu played his final All Blacks game at the World Cup final last year, playing 103 games and crossing the line on 31 occasions.
Tuilagi's last test matches were against the All Blacks, failing to score in three straight tests, but he showed his class in 2012, dotting down as England claimed one of their biggest ever wins over New Zealand, 38-21.
Elsewhere in the side, Luke Cowan-Dickie is the 24th player retained by Jones and is acting as injury cover for hooker Jamie George.
Prop Kieran Brookes, who makes his first appearance of the Six Nations in England's matchday 23, takes the place of his Northampton teammate Paul Hill.
Tuilagi won the last of his 26 caps on the 2014 summer tour to New Zealand before a serious groin problem struck.
Having made his injury comeback this season, he then went down with a hamstring problem and has played just six matches for Leicester in the current campaign, although he scored a try against Exeter on Sunday.
Leicester director of rugby Richard Cockerill insists the British and Irish Lions centre is "five or six games away from being fully fit to play 80 minutes of Test rugby" and also has misgivings over his suitability for a role as a replacement given the length of time he has been out.
"Even if you put him on the bench to be an impact player for the last half an hour, what happens if you have to put him on after five minutes?" Cockerill said.
Jones, however, has already stated that Tuilagi is capable of playing 20 minutes and intends unleashing him in the final quarter against Wales as England seek to take another step towards a first Grand Slam since 2003.
The inclusion of Daly, who Jones says covers both centre positions and fullback, means Tuilagi would not be forced into action if there was an early loss to the first-choice midfield pairing of Owen Farrell and Jonathan Joseph.
England have sorely missed their midfield wrecking ball and most feared three-quarter, who feared his career might have been over amid three aborted comebacks during a torrid recovery from his groin issue.
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