The news will be a fresh blow to his son John Terry, 29, whose reputation has suffered after he was sacked as England's captain earlier this year following an affair with Vanessa Perroncel, the ex-girlfriend of Wayne Bridge, his former England team-mate.
Chelsea and Carlo Ancelotti draw up summer spending plansHead of Elite model agency charge over cocaineTerry's father, who is unemployed, was caught on camera allegedly arranging a deal to supply three grams of cocaine to an undercover newspaper reporter.
He fixed a price of £120 for the drugs, making £40 profit, and was recorded saying: 'The stuff's all right. I get off on it.'
Ted then asked the reporter, who was pretending to buy the drug for his boss, not to mention where it came from.
'This is between me and you,' he said. 'Don't tell him I'm John Terry's dad.'
He was arrested after the incident at the Unit 4 bar in Chafford Hundred and answered bail on Friday.
After being charged, he was released on bail until May 13 when he will appear at Basildon Magistrates Courts.
Ted, who lives near the bar in a £250,000 house his son bought for him, faces a maximum sentence of six months in prison or a £5,000 fine if he is convicted.
Terry's mother, Sue, and mother-in-law both accepted a caution for shoplifting in Marks & Spencer last year.