The 31-year-old has called time on his Three Lions career, less than 24 hours before the Football Association hearing into alleged racial abuse towards QPR defender Anton Ferdinand - charges denied by Terry.
"He's an outstanding player and in the dressing room he's an outstanding character," Wilkins said on Sky Sports News. "On the pitch he does what the manager requires and that's to lead from the front.
"[Former England manager] Fabio Capello had a massive fall-out with the FA over John because he realised how important he was to our national team.
"I feel very sad for Roy Hodgson in that Roy made it pretty evident he wanted John to be there and be his centre-half. We've got to qualify for the World Cup in Brazil and this is a massive blow.
"It's a massive loss. You will see the loss it will be when John finally has to hang up his boots for Chelsea. To replace a character who has been in that dressing room for such a long period - and has performed at such a consistent level for that period - is very, very difficult indeed."