Grayson, who has worn the number 10 shirt in England's first three matches in the tournament, incurred a calf strain in training on Tuesday. He had not recovered sufficiently by the eve of the match for coach Clive Woodward to risk him in a match England cannot afford to lose.
The decision to start Barkley comes as something of a surprise as he had actually lost his place in the 22-man match squad earlier this week. He was asked to stay at England's training camp when doubts over Grayson first emerged but it had been expected that the more experienced Mike Catt would be brought into the starting line-up with Barkley on the bench.
After their defeat by Ireland earlier this month, England must beat the Welsh to retain a chance of winning the tournament. They travel to Paris next weekend for a showdown with unbeaten France in their final match.
Meanwhile, Wales national coach in waiting, Mike Ruddock, has sent his best wishes to the Welsh team as they prepare to for the Twickenham clash.
The Newport Gwent Dragons coach was named as the successor to Steve Hansen as national coach last week and will take up his appointment in May ahead of the uncapped match against the Barbarians and the summer tour to Argentina and South Africa.
I've always supported Wales whenever and wherever they have played, but I will be watching Saturday's game with extra interest. It is going to be a huge test of the Welsh team as a whole, players and coaches, but I'm sure they will rise to the challenge, said Ruddock.
England may be the World Champions, but that only adds to the incentive for the players as they bid to end a 16 year wait for a Welsh win at Twickenham. If they go into the game with the same attitude they adopted in the World Cup quarter-final in Brisbane earlier in the season then anything could happen.
England: Jason Robinson (Sale); Josh Lewsey (Wasps), Will Greenwood (Harlequins), Mike Tindall (Bath), Ben Cohen (Northampton); Olly Barkley (Bath), Matt Dawson (Northampton); Lawrence Dallaglio capt (Wasps), Richard Hill (Saracens), Chris Jones (Sale); Ben Kay (Leicester), Danny Grewcock (Bath); Phil Vickery (Gloucester), Steve Thompson (Northampton), Trevor Woodman (Gloucester) Replacements: Mark Regan (Leeds), Julian White (Leicester), Steve Borthwick (Bath), Joe Worsley (Wasps), Andy Gomarsall (Gloucester), Mike Catt (Bath), James Simpson-Daniel (Gloucester).
Referee: Andrew Cole (Aus). Wales: Gareth Thomas (Celtic Warriors); Rhys Williams (Cardiff), Mark Taylor (Llanelli), Iestyn Harris (Cardiff), Shane Williams (Neath-Swansea); Stephen Jones (Llanelli), Gareth Cooper (Celtic Warriors); Dafydd Jones (Llanelli), Colin Charvis capt (Tarbes), Jonathan Thomas (Neath-Swansea); Michael Owen (Dragons), Brent Cockbain (Celtic Warriors); Gethin Jenkins (Celtic Warriors), Robin McBryde (Llanelli), Duncan Jones (Neath-Swansea). Replacements: Mefin Davies (Celtic Warriors), Ben Evans (Cardiff), Gareth Llewellyn (Neath-Swansea), Martyn Williams (Cardiff), Dwayne Peel (Llanelli), Ceri Sweeney (Celtic Warriors), Tom Shanklin (Cardiff).
AFP - 2004.
