The City Football Group has confirmed that Hodgson, who has been out of the game since leaving his England role after Euro 2016, will advise coaches at Melbourne City in the coming weeks.
The arrangement is purely on a consultancy basis, with Hodgson not in consideration for the manager's position at the A-League outfit.
Michael Valkanis is currently coaching the side in a caretaker capacity having been appointed for the remainder of the season, which ends next month, following the departure of John van 't Schip in January.
Hodgson will be available to work with Valkanis and the club's 14 other coaches after agreeing a short-term contract. The 69-year-old former Inter Milan, Liverpool, Fulham and West Brom boss had recently been linked with vacancies at Leicester and Middlesbrough.
The Melbourne deal has come about through Hodgson's friendship with CFG director Brian Marwood, the former Arsenal player who works on football matters throughout the multi-club group.
As well as Melbourne and Manchester City, CFG also owns New York City FC and this week acquired Atletico Torque in Uruguay. It also has a stake in Japanese side Yokohama F Marinos.