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Davies will make a first appearance of the 2014 RBS 6 Nations, having suffered a chest injury during the autumn defeat to South Africa, ensuring George North returns to the wing.
Jones meanwhile, was ruled out with a toe problem just before the victory over France last time out but will take his place at Twickenham alongside Luke Charteris, meaning Jake Ball drops to the bench.
"It's great to have both Jon and Alun Wyn back and available and they come into a very experienced side," said Gatland.
"Jon came through the match well at the weekend and he is ready to go.
"We were happy with the response and performance against France but we know we will have to raise it another level on Sunday.
"We are really looking forward to going up to Twickenham, England have performed well so far and it's set up to be a great game with all to play for."
Elsewhere, Rhys Webb keeps his place after impressing in his first start for Wales against Les Bleus, meaning Mike Phillips continues on the bench.
He is joined at half-back by Rhys Priestland while Jamie Roberts continues outside him, rekindling his partnership with Davies. Alex Cuthbert lines up on the right wing with Leigh Halfpenny at full-back.
The front row is unchanged with Gethin Jenkins and Adam Jones packing down either side of Richard Hibbard while Dan Lydiate, captain Sam Warburton and Taulupe Faletau continue in the back row.
Davies' return means that 11 of Wales' side started the 30-3 victory over England in Cardiff last year, while of the other four Dan Biggar, Phillips and Justin Tipuric are on the bench.
WALES SIDE TO FACE ENGLAND:
15. Leigh Halfpenny (Cardiff Blues)
14. Alex Cuthbert (Cardiff Blues)
13. Jonathan Davies (Scarlets)
12. Jamie Roberts (Racing Metro)
11. George North (Northampton Saints)
10. Rhys Priestland (Scarlets)
9. Rhys Webb (Ospreys)
1. Gethin Jenkins (Cardiff Blues)
2. Richard Hibbard (Ospreys)
3. Adam Jones (Ospreys)
4. Luke Charteris (Perpignan)
5. Alun Wyn Jones (Ospreys)
6. Dan Lydiate (Racing Metro)
7. Sam Warburton (Cardiff Blues)
8. Taulupe Faletau (Newport Gwent Dragons)
16. Ken Owens (Scarlets)
17. Paul James (Bath)
18. Rhodri Jones (Scarlets)
19. Jake Ball (Scarlets)
20. Justin Tipuric (Ospreys)
21. Mike Phillips (Racing Metro)
22. Dan Biggar (Ospreys)
23. Liam Williams (Scarlets)