The 60-year-old agreed two years ago to join former club Inter Milan as an assistant to the president Massimo Moratti after coaching Finland.
"The job with Inter would have been a lot easier and a lot less pressure," said Hodgson, who managed Blackburn for 17 months in 1997-98.
"But the Finnish job had gone so well and, as the day approached for me to hang up the boots, I got cold feet on the subject.
"I've been a little surprised by the interest in me, not just from Fulham but other sources as well."
Hodgson promised he will use his lifetime of contacts when he spends a £15million war chest in the January transfer window, and added: "I will have to move quickly."