The 19-year-old was named in Aidy Boothroyd's England Under-21 squad for a 2019 Uefa European Under-21 Championship qualifier against Ukraine last week, but has now withdrawn and been replaced by West Bromwich Albion counterpart Sam Field in advance of Friday night's (10 November) clash at the Obolon Arena in Kiev.
The exact nature of the injury has not been confirmed, although Everton were quick to stress that the issue was only minor.
According to The Mail, Davies needs treatment on a hamstring problem and could have stayed with the Young Lions if they had a second fixture to prepare for next week.
"We don't want to risk anything, especially as he has played so many games and done so well for Everton this season," said Boothroyd, who has also seen Josh Onomah, Dael Fry and Ben Chilwell pull out injured, in addition to losing the influential trio of Tammy Abraham, Joe Gomez and Ruben Loftus-Cheek to the senior ranks.
"If we had a second game, he would be ready for it, but we have sent him back."
Such an injury also rules out the possibility of Davies earning his first call-up for the senior squad before their second friendly against Brazil on Tuesday.
With his midfield options appearing particularly threadbare, with the likes of Dele Alli, Jordan Henderson, Fabian Delph and Harry Winks all unavailable, Southgate has indicated that he may draft in a couple of Under-21 players after the first meeting with Germany. Davies would surely have been a prime candidate for a promotion.
Providing the issue is as insignificant as reported, the academy graduate should be fit to make his 20th appearance of the season when Everton, now out of the relegation zone and up to 15th after picking up their first three points under caretaker boss David Unsworth last weekend with a dramatic 3-2 win over Watford, travel to face rock-bottom Palace at Selhurst Park.
However, James McCarthy has missed the last two matches since making his first start since February in the Carabao Cup fourth0round defeat to Chelsea and is not fit enough to play for the Republic of Ireland in their crucial two-legged World Cup play-off tie against Denmark.
Unsworth said last month that Ross Barkley was around three to four weeks away from returning from his own hamstring problem, while summer signing Cuco Martina missed the Watford win after a heavy fall suffered in the Europa League loss in Lyon.
Long-term absentees Ramiro Funes Mori, Seamus Coleman and Yannick Bolasie all remained sidelined until 2018.