Hodgson was under pressure after England finished bottom of Group D in Brazil, but that has eased on the back of a four-match winning run.
Cahill, whose team face Slovenia in a Euro 2016 qualifier on Saturday, said Hodgson had fixed the issues that troubled England at the World Cup.
"He's been great for us," the centre-back told a news conference.
"We had a disappointing summer which everybody knows about. But I think leading up to that we did well and the summer was disappointing but we've kind of moved on from there now.
"The manager's addressed things that he wanted to address, changed slight things that he wanted to change and it's working at the minute for us.
"We've got a new squad, a younger squad and we're building and going in the right direction so everyone's behind the manager and at this moment in time we're playing really well."
Wayne Rooney is set to earn his 100th England cap against Slovenia, bringing him just 25 shy of joining Peter Shilton as the nation's most-capped player.
Cahill backed the Manchester United forward to break Shilton's record, as well as the goalscoring mark held by Bobby Charlton (49) that Rooney (43) is chasing.
"I personally think he can break both, if he keeps in the right frame of mind which he is and he trains hard, he looks after himself," Cahill said of Rooney.
"He's reaching 100 caps at the weekend for someone as young as what he is is such an achievement.
"It's a fantastic achievement so I don't see why not and he's a fantastic footballer, so I'm sure he'll be in the set-up for many, many years to come."
Cahill's fellow defender, Southampton's Nathaniel Clyne, is eyeing his England debut and said he wanted to face Slovenia.
"I'm ready for Slovenia or if I have to wait for my chance to play against Scotland [on Tuesday] I'll wait and I'll just try and put in a good performance and show everyone how good I am," he said.
