Rooney's place in the side has been the subject of fierce debate for some time now due to an underwhelming season with Manchester United in which he failed to reach double figures of goals in the Premier League for the first time during his 12-year stay at the club.
"I would play [Vardy and Kane] up top, and let them cause havoc. I'd play the diamond with [Eric] Dier sitting, and I'd have Rooney at the tip of it," he told talkSPORT.
"Dele Alli's happy coming in from the left, he did it loads for Tottenham; him and [Christian] Eriksen swapped a lot. So you'd have Rooney at the tip of it, and if he was starved of the ball higher up, he could drop deep anyway and get on the ball.
"Then it allows Vardy to stretch [the opposition] and play in the position he loves. For me, on the right, I'd probably play [Danny] Drinkwater - but I think he'll play [Jordan] Henderson. I don't think he'll take Drinkwater [to the Euros]."
Hodgson must pick his final 23-man squad for the tournament by May 31, with Friday's friendly against Australia being England's last game before that deadline.