The Internazionale coach has agreed to join Rovers on 1 July in a three- year deal worth pounds 1m a season. However, Rovers have insisted on a clause in 49-year-old Hodgson's agreement which states that he will personally pay Rovers pounds 250,000 if another club comes in with a better offer before that date.
Hodgson joins Ray Harford, Tony Parkes and Sven Goran Eriksson as a past, present or prospective manager at Ewood Park this season.
Rovers announced the appointment 24 hours ahead of the club's annual meeting where the chairman, Robert Coar, was due to face questions about the Eriksson fiasco.
Eriksson, the Sampdoria coach, had agreed to join Rovers at the end of the season, but decided to stay in Italy when Lazio showed their hand.
"We wanted a penalty clause putting into the agreement and Roy was more than willing to accept it," Coar said. "This means if he does not take up the job he will personally have a considerable financial penalty."
Rovers supporters will remain sceptical until Hodgson sits behind his desk, which could happen earlier than July. "If Roy was to become available sooner than expected he would come straight to us," Coar said. "He almost climbed down the phone when we contacted him." Parkes, who will continue as caretaker manager in the meanwhile, will stay on the coaching staff when the new man arrives.
Rovers, Coar added, had moved "quickly and decisively" five days after Eriksson had ended weeks of speculation about his intentions. "It is necessary for people to know that it was up to Sven Goran Eriksson to terminate his agreement in writing before we could move on," Coar said.
"We are delighted to have secured the services of a man with great knowledge of the European football scene. This confirms our intention to be a leading club in both the Premier League and Europe."
Hodgson, whose playing career took him to Crystal Palace, Maidstone United and the South African side Berea Park, has little experience of managing in this country. Promoted to manager at Bristol City in 1982, he was dismissed four months later after a disappointing run of results when the club was taken over by new owners. He returned to Sweden where he managed Orebro and Malmo before taking charge at the Swiss club Neuchatel Xamax. Next stop was the Swiss national side, whom he guided to the 1994 World Cup finals and Euro 96.
"After a long absence I am very happy to be returning to work in England in the Premier League, undoubtedly one of the finest leagues in world football," Hodgson said. "My experience in Italy has been invaluable and I hope to put it to good use with Blackburn."
Hodgson was first approached by Rovers after Harford resigned. "When I was asked in October I was unsure about my position and the opportunity passed before anything could be decided," he said. "I have been more than satisfied with my time at Inter."
Massimo Moratti, the Inter president, was surprised by the speed with which his coach of 16 months decided his future lay in Lancashire, but the separation was amicable.
"He conducted the matter with his usual intelligence and correctness, and it is in that spirit of freedom that I let him go despite his contract to 1999," Moratti said.
Hodgson's expensive Inter side includes England's Paul Ince, who is unlikely to follow him to Rovers, prefering instead a London club. Results, however, have been inconsistent.
Fans had recently heckled Hodgson and the experience had made its mark. "He's a man who suffers if he does not succeed, if he fails to have the 100 per cent backing of public opinion," Moratti said.
Inter are third in Serie A, seven points adrift of the leaders, Juventus. Although the club are favourites to win the domestic cup and are also still in the Uefa Cup, their title hopes have taken a reverse. Ironically, it was Eriksson's Sampdoria, who beat Inter 4-3 at home, that did much of the damage.
In another twist, it is reported in Italy that Erikkson may now do a "Blackburn" on Lazio and step into Hodgson's shoes at Inter. "I will have to think about that," Moratti said.
Roy Hodgson factfile
1947 Born 9 August.
1965-75 Player with Crystal Palace (no League games), Maidstone United and a South African side, Berea Park.
1976 Starts managerial career with Halmstad in Sweden.
1979 As assistant manager to another Englishman, Bob Houghton, helps another Swedish club, Malmo, reach European Cup final, which they lose to Nottingham Forest.
1980 Joins Bristol City as assistant manager to Houghton.
1982 Appointed manager at Ashton Gate but dismissed within four months, after a poor run of results, when club is taken over by new owners.
1982 Returns to Sweden, where he manages both Orebro and Malmo.
1990 Leaves Sweden for Switzerland, taking over at Neuchatel Xamax.
1992 Coach of Swiss national side, whom he took to the 1994 World Cup in the United States. Was in charge when they qualified for Euro 96.
1995 Appointed coach of Italian Serie A club, Internazionale.
As player None.
As manager Two championships with Halmstad, five consecutive championships and two Swedish Cups with Malmo.Reuse content