Pearce, manager of the England Under 21s and one of Fabio Capello's most trusted deputies, has given a clear indication that Terry could hold on to the captain's armband following the recent allegations about his private life.
The Chelsea defender is due to meet England boss Capello on Friday after being accused of having an affair with Vanessa Perroncel, the ex-girlfriend of international team-mate Wayne Bridge.
Next move: Pearce (left) insists Capello will make the right decision
The revelations have divided opinion with senior England players - Frank Lampard, Steven Gerrard and Rio Ferdinand - sending Terry messages of support while members of the FA's International Committee have called for a new captain to be appointed before the World Cup.
HAVE YOUR SAY. Should Terry be stripped of the England captaincy? John Terry has been named as having an affair with the ex-girlfriend of team-mate Wayne Bridge. Terry is claimed to have cheated behind his wife's back with Vanessa Perroncel. Do you think he should be dumped as skipper? TELL US WHAT YOU THINK Terry is unlikely to step down, leaving the decision in Capello's hands and Pearce, who sits with the Italian during matches, said: 'Fabio will be wanting to be a dominant voice. I couldn't see anyone else going above Fabio and making decisions in respect to who captains the side.
'I think the last decision should always be the manager's on whatever goes on. The one thing I would say is John Terry is a fantastic captain, in footballing terms on and off the pitch I think he is a selfless professional and his form is fantastic for his country.'
Terry was booed throughout Chelsea's 2-1 weekend win over Burnley -where he scored the winner - and the draw at Hull on Tuesday night.
Pearceadded on Sky Sports News: 'I'm not a big lover of witchhunts of peoplewhich I'm afraid our country tends to follow a little bit these days.
'The bottom line is John, his family and everyone concerned in the matter, it's a matter for those people.'
Responsibility: Terry has been Capello's leader on the pitch
Terry's spokesman, Phil Hall, has told the public not to expect any public comment from his client before the meeting with Capello.
'John Terry asked me to make it clear that he has made absolutely no statement about his future as England captain,' said Hall.
'He is keeping his own counsel until he speaks to England manager Fabio Capello and then Mr Capello will decide what announcement will be made.'
England and Tottenham legend Jimmy Greaves believes Terry should offer to resign.
Greaves, who scored 44 goals in 57 games for his country, told talkSPORT: 'If I were him I would offer my resignation to the manager and I would say "I'm still available for the captaincy and if you want me as captain then I will continue".
'But I would offer my resignation. That might ease the situation for John Terry and the situation in general because it's now been blown out of all proportion. It's happened. When you look at it what is it all about?'
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