eliminate the premiership problem entirely, no English players will play in the premiership, simples.
If Capello, or even Dave the gaffer, had taken a squad of talented English players fron the Championship and leagues 1/2 we'd have had a better showing and quite probably be looking forward to the Argentina game.
Scrap the Premier league and have Divisions 1, 2, 3 and 4 managed by the same organisation.
reducing the number of Foreign players would probably be illegal or require UEFA support (i beleive there are new rules for this, ensuring 5 "home grown players" in each team).