The 24-year-old challenged Leonardo Senatore in the air five minutes into his side's 27-14 triumph at Twickenham, becoming just the fifth Red Rose player to be sent off in a Test match.
Daly was initially handed a ban of six weeks, which was halved due to mitigating factors and an acknowledgement of wrongdoing, ruling him out of next Saturday's final Autumn International against Australia.
A statement from World Rugby's Disciplinary Committee read: "Mr Daly accepted that he had committed an act of foul play and that it warranted a red card. Accordingly, the Disciplinary Committee, chaired by Kathrine Mackie (Scotland), alongside Derek Bevan (Wales) and Hugo Southwell (Scotland), considered what would be the appropriate sanction.
"Having viewed video footage of the incident, listened to evidence and representations from and on behalf of the player, and reviewed all of the other evidence, the Disciplinary Committee found that Mr Daly had acted recklessly and that the offending merited a mid-range entry point based on World Rugby's scale of seriousness, which carries a six-week playing suspension.
"The Disciplinary Committee further found that there were no aggravating factors and that there were a number of mitigating factors (including Mr Daly's acknowledgement of wrongdoing, expression of remorse to the injured player and his good conduct at the hearing) such that his playing suspension be reduced by three weeks."
England back Daly will be back in contention for club side Wasps' meeting with Bath on Christmas Eve.