John Terry has been reinstated as England captain on a permanent basis with immediate effect. "He was my first choice when I decided I needed a permanent captain," Fabio Capello said. "I did not like the way the armband was moved around in the game in Copenhagen, and I saw that it was upsetting for him too. I think one year's punishment is enough."

The England manager needed to make a decision on the captaincy because both Rio Ferdinand and Steven Gerrard are unavailable for Saturday's European Championship qualifier against Wales and, faced by the possibility that the former may not play again this season and the latter's understated leadership qualities, he has opted to restore a player he describes as the group's natural leader. "He is the biggest personality in the dressing room," Capello said. "He made mistakes but it is normal for people to make mistakes. I think he has learned from them and the other players all respect him."

Ferdinand is now back as the vice-captain, assuming he regains fitness, with Gerrard third in line. Capello has spoken to the Liverpool player and claims he is happy with the situation and is concentrating solely on recovering his fitness, although the England head coach's attempts to meet Ferdinand to break the news to him personally were unsuccessful. The pair were both in Manchester on Tuesday to watch United's Champions League tie against Marseille when, according to Capello's version of events, he was snubbed by the player.

"I tried to meet Rio at the United-Marseille game," Capello said. "At first he was ready to meet me but then he preferred not to. I was ready, I wanted to speak with him and explain my decision, but we did not have the chance to talk. I don't know why – it is a question for him, not me. I hope I will meet him in the future to speak with him personally and privately. I don't want to do it by phone, because I think by phone is not so good. I hope he will be fit to play for the national team again because he is one of the most important players." Representatives of Ferdinand will be at Stamford Bridge for Sunday's game between Chelsea and Manchester City, which the Italian is due to watch.

A belated convert to the English captaincy cult, Capello decided to put the matter to bed after watching the Denmark game and forming the conclusion that England needed strong leadership during games. "In all my experience in Italy and Spain, the captaincy doesn't matter so much," he said. "The manager simply turns to the player who has played the most games, or has won most caps. When I knew that Steve and Rio were not fit to play I decided for John because we need a leader on the pitch.

"Even when John played without the armband he was a leader on the pitch and in the dressing room. He was really good, every time. Always he is the same. I know I said he would never be captain again, but you can change your decision. This is normal in life. Sometimes the leader can make mistakes too."

Capello names his squad for the game in Cardiff on Sunday evening and one of his first tasks once the players meet up will be to explain his change of heart over the captaincy. "I will speak about my decision, explain what has happened," he said. "The players need to know why I have gone back to John after one year, but after that it is time to prepare for the game. The players need to be focused on the game, not my decisions.

"I understand about the pressure leading up to a game like this. I remember what the England-Scotland games at Wembley used to be like; when I first took the job as England manager they were proposing to play a friendly against Scotland as my first game. These games are like derbies, and a derby is not like a normal game. Not always the best team wins. As a manager you need to prepare for such a game really well because some players can put too much into it, getting carried away and trying to play at over 100%. It is incredible, but it can be dangerous. You need to arrive focused, with a good balance between body and mind."

England intend to name a slightly larger squad than usual for the Wales game and the home friendly against Ghana three days later, partly to accommodate Andy Carroll and Adam Johnson, two players returning from lengthy injury spells who may be used sparingly. Capello is keeping his eye on Chris Smalling, at present with the Under-21s but on standby for the Ghana game, and is willing to confirm that Jack Wilshere is not only going to be a regular selection from now on but an eventual England captain.

"He plays without fear, with confidence and I never saw someone so young be a leader on the pitch," Capello said. "I'm sure he will be a captain but it will be the choice of another England manager. He still needs more experience, but he is a top-level player now. After [Arsenal's victory] against Barcelona, he has arrived."