Forster broke a 92-year-old Celtic record two weeks ago when he kept his 11th clean sheet in a row.
The 25-year-old has enjoyed stellar performances in the Champions League recently, most notably against Barcelona, but he is still considered an outsider when it comes to international selection.
Forster has been in the match day squad on 11 occasions, but so far he has only earned one cap - in last November's 2-0 friendly defeat to Chile.
Shilton, England's record cap holder, thinks Forster's chances of representing his country will improve if he moves back to the country of his birth.
"I don't want to knock Scottish football, but at the same time, there is no doubt that if Fraser Forster was playing for a Premier League club week in week out and getting tested he would be in a better position than just standing between the sticks for Celtic and having very little to do every week.
"As a goalkeeper, you always need to be tested and he isn't being tested at Celtic now that they are out of the Champions League."
Celtic are unbeaten at the top of the Scottish Premiership, but with Rangers having been effectively demoted from the top flight, the strength of the league is far from what it once was.
Shilton was impressed with the way Forster coped against Chile last year even though the former Newcastle stopper was beaten twice by Alexis Sanchez in the defeat.
Shilton, an ambassador for the Budweiser Open Trials campaign, which will provide amateur footballers with the opportunity to play at Wembley in front of professional scouts, said: "He didn't look out of place during that game.
"He is a big lad and I like his attitude. He went down a bit early for the second goal.
"You could see he was really disappointed and I like that sort of attitude."
With Joe Hart back in form and Ben Foster having recovered from a foot injury, Forster and Ruddy are fighting for the one remaining goalkeeper position in Hodgson's World Cup squad.
Shilton hopes Forster will get a chance to impress in the four friendlies that remain before the World Cup.
"I think Forster may get another half in the next couple of games as Roy will probably experiment," Shilton said.
"The goalkeeper position is vital because anything could happen at a World Cup and your number three could get a chance.
"It doesn't have to be an injury, it could be illness."