The 25-year-old was expected to miss the upcoming autumn internationals against Argentina, Australia and Samoa due to the injury.
He suffered the problem while playing for Wasps last month and coach Eddie Jones had looked at other options.
However, Daly has been back in training since Sunday and is now ready to take on the Pumas on Saturday despite reports he is still struggling.
Daly told Sky Sports: "It wasn't a misdiagnosis. It is just sometimes with the MCL ligament if your knee is stable you are able to do more. It is a kind of, 'Do it, if it hurts, stop it' type of injury.
"Technically there is probably a bit of a tear in the MCL but I think it is very, very minor but it feels really good, back to normal and ready to go.
"I had a couple of days off and then came into the club and then realised that my knee probably wasn't as bad as we first thought and started doing some stuff on it and it felt really good and it ticked all the boxes.
"I got into camp this week and it has gone really well. I've trained fully all week and feel really good."