Tigers wing Varndell will win his fourth international cap having originally been named in the Saxons squad for the Barclays Churchill Cup, while Flood, who joins Tigers from Newcastle on his return from the tour, is set to make his 18th England appearance.
Flood starts at fly-half, with lock Ben Kay again named among the replacements having played the final 20 minutes of the first Test defeat in Auckland. Fellow Tiger Tom Croft misses out on place in the matchday 22, however.
The England side shows six changes in all, with five of those alterations coming in the backline. As well as the inclusion of Varndell and Flood, there are call ups for Matthew Tait at full back, Jamie Noon at outside centre and Danny Care at scrum-half.
The only change in the forward pack is due to an injury to Sale prop Andrew Sheridan, with Tim Payne taking his place at loosehead and Bristol’s Jason Hobson stepping up to the bench.
The All Blacks have made four personnel changes of their own to their starting XV, with coach Graham Henry giving debuts to Chiefs centre Richard Kahui and Blues wing Rudi Wolf.
Crusader Leon MacDonald wins a recall at full-back, while Adam Thomson is in line for his first Test start on the blindside flank. Thomson takes over from Rodney So'oialo, who moves to No8 in place of Jerome Kaino.
England (vs New Zealand, Christchurch, Saturday, June 21, 8.35am UK)
15 Mathew Tait Newcastle Falcons
14 Topsy Ojo London Irish
13 Mike Tindall Gloucester Rugby
12 Jamie Noon Newcastle Falcons
11 Tom Varndell Leicester Tigers
10 Toby Flood Newcastle Falcons
9 Danny Care Harlequins
1 Tim Payne London Wasps
2 Lee Mears Bath Rugby
3 Matt Stevens Bath Rugby
4 Tom Palmer London Wasps
5 Steve Borthwick Bath Rugby (c)
6 James Haskell London Wasps
7 Tom Rees London Wasps
8 Luke Narraway Gloucester Rugby
Replacements
16 Jason Hobson Bristol Rugby
17 David Paice London Irish
18 Ben Kay Leicester Tigers
19 Joe Worsley London Wasps
20 Pete Richards London Irish
21 Olly Barkley Bath Rugby
22 David Strettle Harlequins
New Zealand: Leon MacDonald (Crusaders); Sitiveni Sivivatu (Chiefs), Richard Kahui (Chiefs), Ma'a Nonu (Hurricanes), Rudi Wulf (Blues); Daniel Carter (Crusaders), Andy Ellis (Crusaders); Neemia Tialata (Hurricanes), Andrew Hore (Hurricanes), Greg Somerville (Crusaders), Brad Thorn (Crusaders), Ali Williams (Crusaders), Adam Thomson (Highlanders), Richie McCaw (Crusaders), Rodney So'oialo (Hurricanes)
Replacements: Keven Mealamu (Blues), Tony Woodcock (Blues), Anthony Boric (Blues), Sione Lauaki (Chiefs), Jimmy Cowan (Highlanders), Stephen Donald (Chiefs), Mils Muliaina (Chiefs)