Due to injury concerns, Woodgate did not make Tottenham's Premier League list.
Merson wrote in his column for the Daily Star: "Not being named in Tottenham's squad of 25 is a huge blow to the defender's confidence - it's got to be disheartening for him.
"If he doesn't prove his fitness to be named in Harry Redknapp's January squad then I fear it is all over for him.
"If you look at it positively, at least he doesn't have to rush himself back which could be a good thing for him in the long run.
"We will see just how badly he wants to play again because there is not that carrot of first-team football waiting for him if he does get himself fit."