Lancaster's revolution began to take shape when he unveiled a 32-man squad on Wednesday, featuring 13 changes from the failed World Cup campaign and nine uncapped players.
Mike Tindall, Nick Easter and Mark Cueto have all been dropped for the RBS 6 Nations, while Delon Armitage and Matt Banahan are relegated to the England Saxons squad.
Lancaster backed his young guns to fire England back to the top of world rugby, and Farrell is at the forefront of that ambition.
The 20-year-old was on loan at Bedford at the start of last season but is now preparing to start for England in their opening Six Nations game against Scotland on February 4.
"The highest compliment anyone can pay Owen is what he has just achieved," Lancaster said.
"He has just gone from being an academy player to playing in a Premiership final; he has gone from the Under-20 World Cup and stepped straight into the senior squad.
"He won't be fazed by it at all. He has temperament and presence and that is what we are looking for."
Six years ago Lancaster's predecessor Andy Robinson thrust Mathew Tait into Test rugby at the age of 18 and promptly dropped him, which set back his development.
Lancaster vowed nothing of the sort would happen to Farrell if things do not immediately go according to plan during the Six Nations, which the coach views as the start of England's road to the 2015 World Cup.
"Am I worried about Owen Farrell playing international rugby? No I'm not," Lancaster insisted.
"Will he be dropped if he plays poorly and be kicked out of the squad? Absolutely no way.
"It is about a new era for English rugby. I always felt that January 2012 was going to be a defining moment about where we are going in the future.
"Hopefully, with the selection we have made we have picked a squad that is talented and excited and committed to getting back to where we want to be at the top of the game."
Farrell and his Saracens team-mate Brad Barritt both received their first senior call-ups, along with Northampton scrum-half Lee Dickson and Harlequins centre Jordan Turner-Hall.
Northampton provide a quarter of the squad with uncapped loose-forwards Phil Dowson and Calum Clark taking their contingent to eight.
Harlequins prop Joe Marler and Wasps hooker Rob Webber are both included along with Ben Morgan, the Scarlets number eight who pledged his allegiance to England after turning down an approach from Wales.
Mouritz Botha, Charlie Sharples, Chris Robshaw and Joe Simpson will all be looking to add to the single cap they won under Martin Johnson's regime.
"We think it is a tremendous opportunity to build a squad which has potential for now and for the future," Lancaster said.
"We have a fantastic opportunity here, a new group who have been desperate for this chance. We have to pull together as a team pretty quickly."
Farrell is likely to line up in the centre against Scotland, with club team-mate Charlie Hodgson at fly-half in place of the injured Toby Flood.
"I was pretty shocked when I first heard I had been called up by England and it is a massive honour," admitted Farrell.
"I got my chance last year when a couple of fly-halves were injured and I got the opportunity to play with some brilliant players. You learn quickly with players like that around them."
Farrell's work ethic was compared this week to Jonny Wilkinson.
"You want to be the best you can be," Farrell added from Cape Town, where Saracens are training ahead of their Heineken Cup clash with Biarritz.
"Everybody knows how hard Jonny worked. He's the ultimate professional. Everybody knows it takes hard work. You turn up every day excited to train."
Toby Flood is the most experienced member of the squad with 46 caps, although he is set to miss the start of the Six Nations with a knee ligament injury.
The Leicester fly-half is not alone and Lancaster has already had to make some temporary changes to his squad.
Bath lock Dave Attwood, Saracens full-back Alex Goode, Leicester second row Geoff Parling and Gloucester centre Henry Trinder will join the elite squad as temporary replacements for Flood, Courtney Lawes, Louis Deacon and Manu Tuilagi.
Lancaster will wait until the end of England's training week in Leeds, which begins on January 23, before deciding who to appoint as captain.
"Dylan Hartley, Chris Robshaw, Ben Youngs, Tom Wood, Toby Flood; they are the type of names I am thinking about who are going to become the future leaders of this England team - good characters, good people, talented players," Lancaster said.
England open the defence of their title against Scotland at Murrayfield on February 4.
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