The 30-year-old midfielder, who has been linked with a summer move to Real Madrid, backed Hodgson's plans, welcomed the arrival of new signing Joe Cole and said he was looking forward to playing alongside his England team-mate.
And that has delighted Hodgson, who has met Gerrard only briefly since taking over from Rafael Benitez on July 1.
"It's a great piece of news," said the 62-year-old Englishman. "There won't be anyone in Liverpool who isn't delighted to hear that.
"I'm really pleased about it because I've got great respect for Steven Gerrard.
"He's a player who I was really looking forward to working with when I came to Liverpool.
"It seems now with that commitment that this will happen. It gives everyone a boost without question.
"It will be a tough season, with a lot of matches and the disappointment of last season is going to take a while to dissipate, but it is very good that our best player is still going to be playing at this club.
"Hopefully with the signing of Joe Cole - and if we are lucky one or two others, to boost the squad - we will be going into this season's competition, maybe stronger on paper than we were last season."