Villas-Boas agrees with Capello
Capello told Italian TV that he "absolutely" disagreed with the action by the Football Association.
The FA announced on Friday their decision to remove the armband from Terry until the outcome of his court case in July where the Chelsea defender denies a charge of racially abusing QPR's Anton Ferdinand. Villas-Boas said: "He has the right to his opinion and to share that defence with the player."
It is understood that Terry, 31, has no intention of quitting international football and is intent on playing for England at Euro 2012.
Meanwhile, Sir Alex Ferguson claims the FA and Capello need to sort out their differences over Terry.
The England manager is due to meet FA chairman David Bernstein for talks later this week when the issue will be raised.
Ferguson told CNN: "There has to be some communication regarding the issue. I know Fabio has been abroad but he's back now so the next few days should reveal everything.
"It's a difficult situation for both sides.
"When you are the manager of a team and have a captain that is an important part of that team then you don't want to lose him, so I can understand there's a lot of discussion and controversy about it."
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