Wales flanker Dan Lydiate, who captained the tourists to a 35-0 victory over the Melbourne Rebels on Tuesday, comes into the starting line-up at blindside flanker.
In the front-row Makovina Vunipola replaces the injured Alex Corbisiero and Geoff Parling comes in for Paul O’Connell at second-row.
England’s Ben Youngs is named at scrum-half and Ireland wing Tommy Bowe takes over from Alex Cuthbert on the right wing.
On the bench there are five changes with Ryan Grant, Sean O’Brien, Conor Murray, Tom Croft and Alex Cuthbert earning spots alongside Richard Hibbard, Dan Cole and Owen Farrell.
Gatland said: “We said after the First Test that we had improvement in us and we are confident that this is the case. Several players have put their hands up this week and have forced their way into the Test side while several players have returned to fitness.”
“That is typical of Lions tours. We want players to constantly push for selection, we then select who is on form and who is available. Based on that we have selected a squad that is capable of winning the Test and securing the series.”
British & Irish Lions versus Qantas Wallabies, June 29, Melbourne
Leigh Halfpenny (Cardiff Blues/Wales), Tommy Bowe (Ulster/Ireland), Brian O’Driscoll (Leinster/Ireland), Jonathan Davies (Scarlets/Wales), George North (Scarlets/Wales), Jonathan Sexton (Leinster/Ireland), Ben Youngs (Leicester Tigers/England), Makovina Vunipola (Saracens/England), Tom Youngs (Leicester Tigers/England), Adam Jones (Ospreys/Wales), Alun Wyn Jones (Ospreys/Wales), Geoff Parling (Leicester Tigers/England), Dan Lydiate (Dragons/Wales), Sam Warburton (Cardiff Blues/Wales) Captain, Jamie Heaslip (Leinster/Ireland).
Replacements: Richard Hibbard (Ospreys/Wales), Ryan Grant (Glasgow Warriors/Scotland), Dan Cole (Leicester Tigers/England), Tom Croft (Leicester Tigers/England), Sean O’Brien (Leinster/Ireland), Conor Murray (Munster/Ireland), Owen Farrell (Saracens/England), Alex Cuthbert (Cardiff Blues/Wales).
