England's preparations for the World Cup in South Africa were overshadowed by a dispute surrounding Terry two years ago and their build-up for this year's European Championships in Poland and Ukraine could be disrupted to an even greater degree if Capello loses his job.
The 65-year-old Italian, who has coached England for the last four years, is due to meet the FA Board later this week and his comments to the Italian TV channel RAI will be top of the agenda.
Capello let it be known on Sunday that he disagreed with the decision taken by the Football Association's board to strip Terry of the England captaincy while he awaits trial for alleged racial abuse of Queens Park Rangers defender Anton Ferdinand during a Premier League match last October.
The FA has not said Terry cannot play in the tournament if he is picked. His trial is set for July 9, eight days after it ends and he is pleading not guilty.
But rather than keeping his own counsel, Capello told RAI channel in a live interview from London on Sunday that he "absolutely" did not agree with the decision taken by FA chairman David Bernstein and his board.
Capello said that Terry should not have been dealt with by the FA now, reiterating his earlier stance that the 31-year-old Chelsea skipper was, as far as he was concerned, innocent until proven guilty of the charge.
POOR SHOWING
Capello, who is leaving the job after the Euros in any case, has always appeared to have a good working relationship with Bernstein, especially after the FA continued to back him despite public and media calls for his departure following England's poor showing in South Africa.
They barely scraped out of their group, winning only one of three games, and were eliminated in the second round by Germany following a 4-1 defeat, their worst ever loss in the finals.
Their fortunes have improved since and they qualified for the European finals with ease, winning five and drawing three of their eight qualifiers.
Capello said he had discussed the Terry situation with Bernstein before the FA made its decision, and when asked by RAI if it was right that Terry lost the armband he replied: "Absolutely not.
"I talked to the chairman. I said that in my opinion a person cannot be sanctioned until it is official. It will be for the court to decide, the law, not the sports court but the civil law.
"They will say whether John Terry has committed the offence of which he is accused. I maintain, and I maintained, its right that John Terry was able to keep the armband.
"The fact that the board decided on this, is something that is within their competence when dealing with ethics."
Capello's reported remarks typically caused a media storm in England and ignited the old dispute when Terry was first stripped of the captaincy following an alleged relationship with the ex-girlfriend of his former Chelsea team-mate Wayne Bridge.
SECOND CHOICE
