Daly’s Saracens and England team-mate Jamie George insisted it was “lunacy” that Daly’s qualities had been overlooked previously.
Uncapped quartet Ollie Hassell-Collins, Cadan Murley, Jack Walker and George McGuigan led a raft of changes rung in by new boss Borthwick, who has taken the helm after Eddie Jones was sacked in December.
Daly joined Dan Cole, Ben Curry, Alex Dombrandt and Nick Isiekwe among the big recalled stars, while Leicester centre Dan Kelly was also selected.
The big omissions meanwhile were No8 Billy Vunipola, fly-half George Ford, and wingers Jack Nowell and Jonny May.
Hooker George insisted 57-cap star Daly fully merited a recall, explaining: “That bloke is incredible. He genuinely keeps getting better, this is the thing.
“He came in for a lot of criticism when he played for England at times, and it was lunacy that no one realised how good he was. It’s his all-round game that’s absolutely amazing.
“He’s playing the best rugby of his life and I’m very, very happy for him, because he works incredibly hard to be in that position. For him I know he’s been getting frustrated with not being in the squad because he’s an ambitious person.
“He's very competitive, he wants to be involved in squads like that. It means a lot for him to play for England. All he can control is putting in performances like that and it will be difficult be ignored when he plays like that.
“He brings so much, he’s not just a one-trick pony. He can play in lots of different positions, as we saw today, he’s played brilliantly for us at 13 and he’s been unbelievable at full-back as well. So he’s one of the best.”
Owen Farrell was included after the RFU clarified his availability for the Six Nations opener against Scotland at Twickenham on Saturday, February 4.
Borthwick’s England squad will link up next week, when preparations for the Six Nations kick-off will intensify.
“Ellis Genge and Courtney Lawes will be vice-captains, then Owen Farrell will be captain,” said Borthwick. “I’ve known Owen since he was 17 or 18 years old.
“It’s normal for a teenager to be quiet and reserved, Owen’s different. He came onto the training field and everybody was struck with awe in how hard he pushes himself. That’s Owen, that’s what he does and that’s why he’s captain of the England rugby team.”
Northampton fly-half Smith’s inclusion also proved a surprise, selected ahead of Ford, albeit with the Sale man working back to fitness after long-term injury. The 20-year-old Smith has long been touted as an England prospect, and will now compete with the likes of Farrell and Marcus Smith for the number 10 jersey.
Billy Vunipola’s absence is a big shock, with the Saracens No8 still in fine form and having returned to a fixture in the squad in Jones’ last set of Tests in charge in the autumn.
Ben Curry’s inclusion comes in the wake of his brother Tom’s hamstring injury on duty for Sale. Northampton lock duo Alex Coles and David Ribbans have also been omitted after both featuring under Jones in the autumn.
Full England Six Nations squad:
Forwards: O Chessum, D Cole (both Leicester), B Curry (Sale), A Dombandt (Harlequins), B Earl (Saracens), E Genge (Bristol), J George (Saracens), J Heyes (Leicester), J Hill (Sale), N Isiekwe, M Itoje (both Saracens), C Lawes, L Ludlam (both Northampton), G McGuigan (Gloucester), B Rodd (Sale), S Simmonds (Exeter), K Sinckler (Bristol), M Vunipola (Saracens), J Walker (Harlequins), J Willis (Toulouse).
Backs: E Daly, O Farrell (both Saracens), T Freeman (Northampton), O Hassell-Collins (London Irish), D Kelly (Leicester), M Malins (Saracens), J Marchant (Harlequins), A Mitchell (Northampton), C Murley (Harlequins), H Slade (Exeter), F Smith (Northampton), M Smith (Harlequins), F Steward (Leicester), M Tuilagi (Sale), J Van Poortvliet, B Youngs (both Leicester).