"I wouldn't pick him. I'm surprised everyone still calls him world class," the ex-England international told the Reuters Global Sports Forum on Tuesday.
"United have been awful this season and I put some of that down to Rooney."
One of the most gifted players of the 1970s who only won two caps after being overlooked by successive England managers, Hudson also called on coach Roy Hodgson to take 19-year-old Everton midfielder Ross Barkley to next month's World Cup in Brazil and build the next England team around him.
But the former Chelsea, Stoke City and Arsenal midfielder pulled no punches on Rooney, the 28-year-old United striker whose 38 goals in 89 England appearances make him the country's fifth top scorer of all time.
Rooney is 11 goals behind Bobby Charlton's England record and is set to play in his third World Cup despite failing to score in the previous two editions.
"He is not world class because he's never proved it on the world stage," said the 62-year-old Hudson. "He turns up every now and then and great players don't just turn up every now and then.
"He's got to be consistent at the highest level. We made Rooney into a 'superstar' at a very young age when he didn't deserve to be put in that bracket.
"If you said to a United fan, 'who would you prefer up front - Rooney or Eric Cantona?' - I think the answer would be Cantona every time."
Hudson was more complimentary about Barkley who, like Rooney, has started his career at Everton.
The teenager has made a major breakthrough this season, playing 34 times in the Premier League and impressing with his running, awareness and goalscoring which included a spectacular curling strike from 25 metres against Manchester City on Saturday.
Hudson, who knows a thing or two about midfield artistry, urged Hodgson to include Barkley in his squad for the World Cup where England face Italy, Uruguay and Costa Rica in Group D.
"I thought at the start of the season that Jack Wilshere was going to be the young kid coming through," he explained.
"But this Ross Barkley is the new kid on the block now. He's a fabulous player. People have been putting him in the same mould as the great Duncan Edwards but the problem England have with players like him is getting the ball to him.
"When we have great inside forwards we often bypass them by playing long balls. With Ross Barkley we have to give him the ball, he's got wonderful ability," said Hudson.
"I think he's the one young kid at the moment who can do things that we haven't seen English players do for a long, long time. He is exceptional.
"I think the most important point is that Hodgson must take him just to give him experience. He's the sort of player you build a future team around."
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