The Bath flanker has played fewer than five matches at any level since damaging medial ligaments in his right knee during a Heineken Cup match against Aironi in January.
Moody made his comeback in England's first World Cup warm-up Test against Wales earlier this month only to damage his knee again when Tom Palmer fell on him at a lineout.
The 33-year-old will not play against Ireland on Saturday and he is battling to be fit for England's opening World Cup game, against Argentina on September 10.
But England manager Martin Johnson decided Moody's experience as a World Cup-winner in 2003 and a runner up in 2007 was too valuable to leave behind.
"I feel incredibly honoured to lead this group of players. It's one of life's true privileges," said Moody.
"There are a lot of experienced guys. There is some great young talent coming through.
"It's a huge honour, that never changes, and it will be something I reflect on at the end of my career.
"At the moment it's just doing a job and making sure I do it to the best of my ability. But to lead this group of guys is very special.
"The initial frustration I had on the pitch was 'not again'.
"Yeah (I was thinking my World Cup had gone). I was frustrated. That showed in my reaction.
"My target was always that first game and it still will be."
Moody's elevation to captain for the final game of England's 2010 Six Nations campaign has been cited as one of the key reasons for the squad's upturn in fortune.
From the misery of a torrid 15-15 draw at Murrayfield, England began to play with an attacking ambition which has since carried them to two victories over Australia and a Six Nations title.
The World Cup will not be a place for throwing the ball about, especially in a side coached by Johnson, but Moody's presence around the squad is clearly important.
Johnson admitted he was in a special bracket of players who demanded selection for the World Cup, despite not being fully fit.
Ben Youngs, the Leicester scrum-half, and Sale prop Andrew Sheridan are in the same bracket as they continue their recovery from knee and shoulder operations respectively.
"Would you make that call with everyone? Of course you wouldn't," said Johnson.
"In an ideal world they would all be in great form with game time but we don't live in that world. Lewis is an important piece of what we do. So is Ben and so is Andrew Sheridan.
"We anticipate them being ready to go in the World Cup (against Argentina)."
It seems unlikely Moody will play in every one of England's World Cup matches, in which case Mike Tindall or Nick Easter would deputise.
James Haskell is the front-runner to start at open-side flanker in Moody's absence given Hendre Fourie's omission, though Tom Wood sees himself as a contender across the back row.
Nevertheless, Moody takes a great deal of confidence from the show of support Johnson and the England management have shown him in making him squad captain.
And despite his lack of game-time in recent months, Moody would have no qualms in being thrown back into action against Argentina in a vital World Cup encounter.
"It gives me a lot of confidence, which as a player is fantastic, but for me the most important thing is being fit and getting out there on the pitch and performing," said Moody.
"When you have a long period off in the summer, the start of the season is tough whatever happens. Against Wales I felt great on the pitch. I'm always confident in myself.
"I loved getting out at Twickenham in the first game against Wales. I was truly enjoying that game and that's probably why the frustration showed when I had to come off with 20 minutes to go."
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