The only other change to the match 23 from last week's one-point defeat by South Africa is the return of lock Courtney Lawes, who has played only a few minutes of Test rugby all year, on the bench in place of Mouritz Botha.
The loss of the experienced Flood with a toe injury leaves England with a total of only 206 caps, averaging less than 14 per player and one of the most inexperienced sides they have fielded.
With world champions New Zealand on an unbeaten run of 20 matches, it would have been a big ask to throw Burns in for his first start in such circumstances and came as no surprise that Farrell got the nod.
It comes a day after he was bizarrely was named on the International Rugby Board's four-man world player of the year shortlist despite starting only a handful of Tests following his debut at centre in the opening game of last season's Six Nations.
The son of England backs coach Andy, Farrell lost the starting berth to Flood in the June series in South Africa and was on the bench for the November games against Fiji, Australia and South Africa.
A nerveless kicker, fearsome tackler and composed thinker at the age of 21, Farrell is nevertheless unlikely to introduce much of a spark to England's back line, which has struggled to cut loose, particularly in the defeats to the Wallabies and Springboks.
With Brad Barritt and Manu Tuilagi in the centres, England remain a solid but predictable unit crying out for the pace and verve of 22-year-old Burns.
He has been in sparkling form for Gloucester, is an exciting prospect and was voted Premiership player of the month last week, but Lancaster said he was reluctant to throw him in from the start in such a daunting game after so little preparation time with the squad.
"Owen has got a lot of credit in the bank from what he achieved for us in the Six Nations," Lancaster said in justifying his more conservative selection.
"He had a long, hard season and I don't think his form dropped off (in the June series) quite as dramatically as people made out. He has looked comfortable and accomplished when he has come on.
"Freddie has trained with us before so I'm not worried that he won't be able to come in and get up to speed but the reality is that he would only have one full training session."
Lawes will hope his return is the springboard to a sustained run in the team after injuries restricted him this year to just one 20-minute appearance off the bench against Wales.
England have missed his raw power and aggression but see him linking with Joe Launchbury, who made his first start last week, in a potentially long-term second row partnership.
"We are delighted that Courtney has got an opportunity. He has worked hard to get back in contention and what better game for him to make an impact," Lancaster said.
Lancaster's team tweaks still leave his side desperately short of experience and firepower against a New Zealand side considered one of the best of all time and looking to complete yet another European tour clean sweep.
They have won their last nine games against England, last losing in Wellington in June 2003, and have peerless fly-half Dan Carter back from the injury that kept him out of last week's Cardiff victory over Wales.
England team: 15-Alex Goode, 14-Chris Ashton, 13-Manu Tuilagi, 12-Brad Barritt, 11-Mike Brown, 10-Owen Farrell, 9-Ben Youngs; 8-Ben Morgan, 7-Chris Robshaw (captain), 6-Tom Wood, 5-Geoff Parling, 4-Joe Launchbury, 3-Dan Cole, 2-Tom Youngs, 1-Alex Corbisiero.
Replacements: 16-David Paice, 17-Dave Wilson, 18-Mako Vunipola, 19-Courntey Lawes, 20-James Haskell, 21-Danny Care, 22-Freddie Burns, 23-Jonathan Joseph.
New Zealand team: 15-Israel Dagg, 14-Cory Jane, 13-Conrad Smith, 12-Ma'a Nonu, 11-Julian Savea, 10-Dan Carter, 9-Aaron Smith, 8-Kieran Read, 7-Richie McCaw (captain), 6-Liam Messam, 5-Sam Whitelock, 4-Brodie Retallick, 3-Owen Franks, 2-Keven Mealamu, 1-Tony Woodcock.
Replacements: 16-Dane Coles, 17-Wyatt Crockett, 18-Charlie Faumuina, 19-Luke Romano, 20-Victor Vito, 21-Piri Weepu, 22-Aaron Cruden, 23-Ben Smith.