Skelton was one of three key inclusions for Saturday night's must-win match at the MCG, where the series is on the line, with coach Joe Schmidt able to name his strongest side of 2025.
Australia's best player for the past two years, flanker Rob Valetini, and World Cup hooker Dave Porecki have also been included in the starting side after missing the series-opening 27-19 loss in Brisbane through injury.
Schmidt is counting on the extra muscle helping the Wallabies match the physicality of the Lions, who dominated the hosts in the collision battle in the first Test.
The Wallabies' trophy cabinet is almost bare but Skelton is a four-time European champion who won two English premiership trophies with Saracens and two Top 14 gongs with his French club La Rochelle, as well as a Super Rugby title with the NSW Waratahs.
"Will has accumulated that experience, he knows what it's like to play these players, he plays them regularly and he's won against them regularly in the big European games," Schmidt said.
"Will is a very calm influence ... his experience and his history of being involved in successful teams, I think it just gives other players confidence.
"We've got a group of players who haven't won too much in recent times, whether it's in Super Rugby or whether it's internationally."
His words were echoed by fullback Tom Wright, who said the inclusion of Skelton and Valetini in particular was a huge boost, literally and figuratively, for the team.
"Everyone knows what Bobby (Valetini) brings in particular and then the other bigger fella that comes back for us, Will, his resume speaks for itself.
"Will's a really calm head, won multiple things in the northern hemisphere and obviously a larger than most frame so we're pumped to have Will and Bobby back for sure."
The backline remains unchanged from Brisbane, with Jake Gordon and Tom Lynagh the preferred halves pairing ahead of Tate McDermott and Ben Donaldson, who will again come off the bench.
Schmidt has opted for a six-two forwards-backs bench split, with lock Jeremy Williams, NSW Waratahs back-rower Langi Gleeson and hooker Billy Pollard among the reserves.
He said that served two purposes - with wet weather forecast and also to cover the fact that it's Skelton and Valetini's first Test of the year.
Forwards Matt Faessler, Nick Champion de Crespigny and Tom Hooper as well as outside back Andrew Kellaway have dropped out of the match-day 23.
Schmidt said the side had built confidence from their second-half revival in Brisbane and prepared well for the do-or-die clash.
"The squad has recovered well after a very physical first Test, and the week's preparation here in Melbourne has allowed us a bit more time together," he said.
"We took some confidence from the second half last week, but we know we'll need to improve further against a Lions team that will bring plenty of fire to the contest on Saturday night."
WALLABIES SQUAD FOR THE SECOND LIONS TEST:
James Slipper, Dave Porecki, Allan Alaalatoa, Nick Frost, Will Skelton, Rob Valetini, Fraser McReight, Harry Wilson (capt), Jake Gordon, Tom Lynagh, Harry Potter, Len Ikitau, Joseph-Aukuso Suaalii, Max Jorgensen, Tom Wright. Bench: Billy Pollard, Angus Bell, Tom Robertson, Jeremy Williams, Langi Gleeson, Carlo Tizzano, Tate McDermott, Ben Donaldson.
