Bairstow last played Test cricket in the final match of England’s 2013/14 Ashes whitewash defeat in Sydney, and is rewarded for his brilliant form for Yorkshire this summer.
His county team-mate Ballance, by contrast, has paid the price in an otherwise unchanged 13-man squad after his run of poor scores continued at number three as Australia levelled the Ashes with a 405-run trouncing of their hosts at Lord’s on Sunday.
Ballance has struggled at number three this year, having made a fine start to his Test career in his first summer in that position 12 months ago.
England also announced, in a press release on Tuesday afternoon, that they will move four-time Ashes-winner Ian Bell back up to the pivotal number three position on his home ground at Edgbaston next week.
National selector James Whitaker said: “For the third Test, Ian Bell will move up the order to bat at three - followed by Joe Root, with Jonny Bairstow coming in at five.
“Jonny has worked extremely hard at his game, and his record for Yorkshire speaks for itself. He fully deserves this opportunity.”