"Tommy was great at the Confederations Cup and I know he was really looking forward to coming home and being a part of these important games. But if we are able to get through these qualifiers then he still has time get fit again and be back in consideration for the Intercontinental Playoff in November."
Hudson said Smith's injury presented a great opportunity for Musa.
The 25-year-old, who has played one international for the All Whites in 2014, recently signed for Sporting Kansas City in the MLS.
The All Whites coach said they have been watching him for some time.
"James is a good player, he's been in our environment before and we've been keeping track of him since then," Hudson said.
"He's been in touch with me for a long time, we met on our tour of the States and he's always shown a lot desire to be given a chance and his patience has now paid off. He's strong, very comfortable on the ball and can play at the back and as a holding midfielder. Making his debut in the MLS last weekend was nothing more than he deserves."
The All Whites assemble in Auckland from 27 August to begin preparing for their first game against the Solomon Islands on 1 September.
The winner of the OFC Final Playoff will meet the fifth-ranked South American side in the Intercontinental Playoff in November.