Lallana, who did not make the World Cup squad for Russian Federation and last played for England in June 2017, looked to have been consigned to England history but has now been handed an unlikely lifeline.
On the subject of Cahill, Vardy and Young, he added: "Those guys are older and - in a couple of their cases - aren't playing much with us".
Manchester United defender Luke Shaw has been handed an England recall.
Shaw, 23, last played for England in March 2017, as a second-half substitute in a 1-0 friendly defeat by Germany.
"He has had a hard period adapting to a new club, a horrendous injury, but he has had an extra edge to his game", Southgate said.
Liverpool duo Joe Gomez and Adam Lallana, who missed the World Cup due to injuries, were both selected as well, while Phil Jones and Nick Pope missed out due to injury. "He's showing aggression and desire not to lose, and looking back to his powerful best going past people".
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Jamie Vardy and Gary Cahill are notable omissions following their respective global retirements, while Phil Jones and Nick Pope have both been left out due to injury. It includes midfielder Ruben Loftus-Cheek, a player who has only played 22 competitive minutes for his club Chelsea since appearing at the World Cup for the Three Lions.
"Statistically last year we were picking from a pool in the Premier League of 33 percent English players, this year we are down to 30 - and [among] the top six teams we are on a downward curve", he said after announcing his squad for next month's global games with Spain and Switzerland.
"If we are encouraging young players about entering academies, we are selling them the dream and there's an ethical element there too".
"We wanted some continuity [but] we won't stand still".
"We know what he can do and having got so close to the World Cup it's a bit early to bring him back into the fold".
England boss Gareth Southgate has come out and expressed his concern for the lack of playing opportunities for young English players in the Premier League.