The England star has missed the last two victories against Newcastle and Harlequins because of a groin injury but starts in place of Willie Walker as Dean Ryan's side look to build on the most impressive recent run in the Guinness Premiership.
Balshaw will make his 15th appearance of the season against his former club tomorrow as Gloucester look to extend their five-match winning run dating back to the end of February. However, they will make the trip to the Rec without lock Alex Brown who has still not recovered from nerve damage in his shoulder picked up against Quins.
"We worked exceptionally hard during the international period when we were without our senior internationals and have got ourselves into a position where we can really press for a top two place," head coach Dean Ryan told www.gloucesterrugby.co.uk
"We have three games left but are just solely concerned with dealing with the here and now this weekend. Local derbies are always tense, tough affairs and I am sure tomorrow will be no different.
"Bath have an exceptionally good home record but we are thoroughly prepared for the challenge - it should be a fantastic occasion and one we will relish."
Of Balshaw's return, Ryan added: "Iain is a massive threat as a broken field runner and we need to get him into positions where he can be a danger.
"He is an international-quality player, we are in the run-in and to have that experience at this stage is crucial. We have selected a team purely for this match and I think it is very exciting."
Because of Brown's absence, Will James continues in the second row alongside skipper Marco Bortolami. In the front row, Nick Wood partners hooker Olivier Azam and tight-head Carlos Nieto.
The regular back row trio of Peter Buxton, Andy Hazell and James Forrester start together again.
On the bench, hooker Rob Elloway comes in for Mefin Davies because of family illness.
In the backs, Rory Lawson returns at scrum-half in place of Peter Richards and will partner Ryan Lamb at half-back. In the centre, Mike Tindall will return to his former club and will line-up alongside Anthony Allen, while James Simpson-Daniel, James Bailey and Balshaw complete the back-three.
On the bench, Adam Eustace, Jake Boer and Jack Forster complete the forward options alongside Elloway, while Richards, Walker and Mark Foster are the three-quarter options.
GLOUCESTER (v Bath, tomorrow, 2.15pm): Iain Balshaw; James Bailey, Mike Tindall, Anthony Allen, James Simpson-Daniel; Ryan Lamb, Rory Lawson, Nick Wood, Olivier Azam, Carlos Nieto, Will James, Marco Bortolami (capt), Peter Buxton, Andy Hazell, James Forrester. Reps: Rob Elloway, Jack Forster, Adam Eustace, Jake Boer, Peter Richards, Willie Walker, Mark Foster.
SUPPORTERS are reminded that on Monday at 3pm Gloucester host Harlequins in the Guinness A League at Hartpury College, 3pm.
Head coach Mark Cornwell is expected to be able to call on Ludovic Mercier, Luke Narraway, Adam Eustace, Jonathan Pendlebury, Jack Forster, Jon Goodridge and Mark Foster as Gloucester aim for a third successive victory.
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