Hoddle claimed he is not in contact with the agent and has tried to give Sherwood a fair chance.
"I will not stand for this, it is another example of an injustice", he told the Evening Standard newspaper.
"I have not spoken to Eric Hall since I was manager at Chelsea and at no time have I ever said to him or the player that Tim would never play for this club again.
"I have never said anything of the sort to David Pleat either.
"Tim played in the reserves against Wimbledon on Monday night and we have always tried to be fair.
"From a footballing and team selection viewpoint, I have always tried to do the best thing for the club because that is more important than anything or anyone else."