Capello said: "In my experience I have never seen, never heard and never found racism problems in England football. Racist problems between the players do not exist."
The Italian has been warned by the FA not to say anything that would prejudice the Met Police investigation into claims against Terry - but he declared he had no problem picking him in his provisional squad to face Spain and Sweden.
The decision to include Terry was taken by Capello after discussions with the biggest hitters in the FA: MD Adrian Bevington, secretary Alex Horne, director of football development Trevor Brooking and chairman David Bernstein.
"For this reason I said there is no problem with John Terry. We need to wait to see what will happen about the FA and the police investigation but I can tell you he is innocent until proven guilty."