Davies returns from hamstring trouble to reform his midfield partnership with Blues centre Jamie Roberts, who switches to outside centre.
Halfpenny replaces Scarlets wing Morgan Stoddart, who drops to the bench, and the last of four changes, two positional.
On the bench Sale Sharks scrum half Dwayne Peel joins Scarlets pair Stoddart and Stephen Jones in providing cover for the backs.
Ospreys hooker Richard Hibbard and Blues prop John Yapp cover the front row with two from Rob McCusker (Scarlets), Andy Powell (London Wasps) and Jonathan Thomas (Ospreys) to be confirmed after injury assessment on Thursday.
"This is a crucial game for us as a win will keep us in the Championship mix and take us into that final round with everything still to play for,"said head coach Warren Gatland.
"But it is also a big game for Ireland who are in a similar position to us going into this match."
Ospreys scrum half Mike Phillips and his regional team-mate Ryan Jones will both win their 50th caps. Jones takes his place at No8 in an unchanged back row with the coaches keeping faith with the entire pack for the third fixture in a row.
"The forwards had a tough day at the office in Italy and we were not at our very best so we are looking for a step up in performance this weekend,"said Wales assistant coach (forwards) Robin McBryde.
"Ireland will be tough, they have a well drilled set piece game, are good around the field and are strong defensively.
"They bring intensity to the breakdown area which is always so crucial in these big games and it will be up to us to match them if we are going to be able to provide a platform for our exciting backs to play.
"The debate at fly half will continue long after the Championship is over, but we have gone for James (Hook) on this occasion. James provides a running threat and we will be looking for him to show he can control the game as well and help us play in the right areas.
"Leigh (Halfpenny) had a good run out for the Blues at the weekend, we know all about his pace and what he offers around the field as well as being solid under the high ball and giving us a long range kicking option. Morgan (Stoddart) misses out, but he has done nothing wrong and we know he can be relied on if we need him from the bench.
"We also have a vast amount of experience in Stephen (Jones) and Dwayne (Peel) to call upon if necessary. Both have proved in the past that they can come on and make an impact and neither will let us down."
WALES:Lee Byrne, Leigh Halfpenny, Jamie Roberts, Jonathan Davies, Shane Williams; James Hook, Mike Phillips; Paul James, Matthew Rees (captain), Craig Mitchell, Bradley Davies, Alun Wyn Jones, Dan Lydiate, Sam Warburton, Ryan Jones
REPLACEMENTS: Richard Hibbard, John Yapp, (2 from: Rob McCusker, Andy Powell, Jonathan Thomas), Dwayne Peel, Stephen Jones, Morgan Stoddart
Cardiff Blues have a limited number of tickets remaining for the Wales versus Ireland match to be played on Saturday 12 March kick off 5.00pm, at the Millennium Stadium.
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INTERNATIONAL BIOGS FOR BLUES PLAYERS IN THE WALES SQUAD
14 Leigh HALFPENNY (CARDIFF BLUES - Cap No 1,060)
DoB: 22.12.88. 5'10" / 1.77m. 13st 2lbs / 83kgs
International record: 17 caps (W 6, L 11; 59 pts - 7T, 8PG)
13 Jamie ROBERTS (CARDIFF BLUES - Cap No 1,057)
DoB: 08.11.86. 6'4" / 1.93m. 17st 5lbs / 110kgs
International record: 27 caps (W 12, L 15; 10 pts - 2T)
4 Bradley DAVIES (CARDIFF BLUES - Cap No 1,065)
DoB: 09.01.87. 6'6" / 1.98m. 19st 1lbs / 121kgs
International record: 20 caps (W 8, L 11, D 1)
7 Sam WARBURTON (CARDIFF BLUES - Cap No 1,070)
DoB: 05.10.88. 1.88m / 6'2". 16st 4lbs / 103kgs
International record: 12 caps (W 5, L 6; 5 pts - 1T)
17 John YAPP (CARDIFF BLUES - Cap No 1,031)
DoB: 09.04.83. 6'2" / 1.88m. 19st 4lbs / 122.4kgs
International record: 19 caps (W 13, L 6)