He has also put Ulrika Jonsson up for the public vote, deciding previously that she was the housemate with the biggest ego.
As Head of the House with special privileges, Terry picked Lucy after the celebrities showcased the talents that made them famous.
Lucy did a `News in Briefs`, including a presentation on the Labour Party and Wags. She decided to add a long hooded jumper to her briefs.
In the Diary Room, Terry said of Lucy: "She's a very bright girl, she's a very nice girl. I have never ever heard of her. I've never seen her in a bikini, or with her waps out."
The talent contest kicked off with rapper Coolio performing his song Gangsta's Paradise to the group. Actors Verne Troyer and Tina Malone were next, with their rendition of Romeo and Juliet.
Ulrika did a weather report before explaining why she is famous. Mutya Buena sang Hole In The Head by her former band, the Sugababes.
Ben Adams sang a song from his days in A1 as Ulrika fanned her face with her hands. Michelle Heaton, dressed in a black PVC catsuit, sang one of Liberty X's hits.
Scots politician Tommy Sheridan told why he is famous, explaining that he has "tried to speak the truth of power".
The last housemate to perform was La Toya Jackson who sang one of her brother Michael's songs.