For 23-year-old Grey the gold was expected, but not a world record of 17.55sec. Hodge, 22, destroyed the favourite, John Lindsay of Australia, in a time of 15.74. Chris Hallam, of Cwmbran, took the bronze in the same race.
More British success came from Noel Thatcher, who won the men's B2 class 1500m in a Games record of 3min 56.33sec, 43 seconds slower than his own world record time set last year.
In the B3 class 1500m, Anthony Hamilton won bronze for Britain in 4:04:77, behind the Frenchman Christophe Carayon, who set another Games record of 4:02:24.
Tracey Hinton, a 22-year-old blind 200m runner from Cardiff, won a silver medal, clocking 27.23sec, behind Spain's Precocion Santa Marta's world record 26.04. David Smith, a 22-year-old cerebral palsy cyclist from Dudley, recorded a personal best of 7:36.03 in the 500m but finished fourth.