The Arsenal man ruptured the anterior cruciate ligament of his left knee in Saturday's 2-0 FA Cup third-round win over Tottenham and will not feature again this campaign.
With a six-month lay-off expected, he will also miss the FIFA World Cup in Brazil, once again denying him the chance to shine on the world's biggest stage.
After being taken to the 2006 World Cup by Sven-Goran Eriksson as a 17-year-old and not used, Walcott was not included in Fabio Capello's 2010 selection.
Hodgson has backed the attacker to come back strongly, however, having overcome a complicated abdominal issue already this term.
"I spoke with Theo and just wanted to express my disappointment to him," Hodgson told The FA's official website.
"It is a blow for him personally of course, and for both Arsenal and England.
"We had quite a lengthy conversation and it is such a shame that we have lost a player of his calibre for the World Cup, he has been incredibly unfortunate and we wish him a speedy recovery.
"Having worked with him for two years as England manager I know the character he has, and I know he will come back even stronger from this setback."
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