Petaia, 19, will replace James O'Connor at centre for the do-or-die encounter in what will be his first run in the midfield at test level.
It was described by Fox Sports Australia as "the biggest selection bombshell in Australian World Cup history".
In his two previous tests, both of which were during the World Cup, Petaia has played on the wing. He featured in 11 Super Rugby games for the Reds this year in an injury-riddled campaign.
Petaia will find himself squaring off against English star Manu Tuilagi, and will partner Samu Kerevi in the midfield.
Reece Hodge returns on the wing following a three-week suspension, while Kurtley Beale has completed concussion protocols to start at fullback.
Christian Lealiifano returns to the 10 jersey alongside Will Genia in the halves, in what will be the first start for the pair since the Wallabies' 16-10 victory over Argentina in Brisbane in July.
The clash will be the seventh meeting between the two sides at World Cup, having split their contests three games apiece. However, Australia have lost their last six clashes against England.
The match kicks off at 8.15pm on Saturday.
Wallabies: Kurtley Beale, Reece Hodge, Jordan Petaia, Samu Kerevi, Marika Koroibete, Christian Lealiifano, Will Genia, Isi Naisarani, Michael Hooper (c), David Pocock, Rory Arnold, Izack Rodda, Allan Alaalatoa, Tolu Latu, Scott Sio.
Reserves: Jordan Uelese, James Slipper, Taniela Tupou, Adam Coleman, Lukhan Salakaia-Loto, Nic White, Matt To'omua, James O'Connor.