The Germany international is a surprise omission from Roberto Mancini’s list after starting all five games since arriving on loan from Arsenal last month.
UEFA regulations allow clubs to register three new players for the knockout stages but only one can have previously played in a UEFA club competition group-stage match for another side in the same season.
Podolski would therefore have been eligible, despite playing for the Gunners in the Champions League, but Mancini has instead selected Xherdan Shaqiri, who represented Bayern Munich in Europe’s premier club competition.
Dani Osvado, on loan at Inter from Southampton, was also left out of the 23-strong squad.
But Davide Santon, who joined the club from Newcastle on Monday, and George Puscas, who made his Serie A debut in last weekend’s 3-1 defeat to Sassuolo, have made the cut.