Hodgson was named as England's head coach in May last year and had little time to prepare for Euro 2012, which saw the team lose on penalties against Italy in the quarter-finals.
Milner feels England have made great strides since they struggled to retain the ball against the Italians and is full of optimism ahead of two World Cup qualifiers with minnows San Marino on Friday and group leaders Montenegro four days later.
"The squad is in a really good place at the moment. The longer we work with the manager, he is going to get his ideas over as well and you will see improvements in the team," said the Manchester City midfielder.
"You can see that already since the Euros. We started there from a strong base and maybe didn't quite retain the ball as well as we could have done.
"Our forward play was not as good as it could be but that's improving all the time I think we are moving forward all the time and the performances are improving as well.
"That's a positive sign. The squad is changing all the time, there are younger players coming in, but we have still got the mix of the senior players as well."
England are expected to claim a healthy win over San Marino, but Milner insists the players must treat their opponents with respect as they move towards a testing match against Montenegro.
Milner said: "We need to make sure we concentrate on San Marino first. We know if we play anything like our best we should get a positive result.
"We have to make sure we go there and do that and concentrate fully. Then it's a tough trip to Montenegro.
"We know it well. We have been there before. It will be tough but if we play to our potential and keep improving, I am sure we will get two positive results."