Following a positive start to the season, the newly-promoted Owls have now gone seven matches in all competitions without securing a victory, shipping 15 goals in the process.
Discussing his former club's current plight, ESPN analyst Waddle said that manager Dave Jones must concentrate on ensuring his side become more difficult to break down.
"They started really well but now it looks like they're struggling to win anywhere. He's got to sort it out. Dave needs to get the defence sorted out because they are leaking far too many goals," said the 51-year-old.
"Looking from the outside I think if they get the defence sorted they'll be alright because they will create and they will score. You can't keep shipping two goals a game in any league. Every mistake they are making is getting punished at the moment.
"I'm sure Dave knows that but you don't want to lose belief and confidence. There was a buzz because of the way that they come up, pipping their rivals, you really don't want to miss out on that because of a relegation battle."
Looking ahead to the rest of the campaign, the former Marseille and Tottenham Hotspur winger is hopeful that there is enough quality in the Wednesday squad to keep them in the second tier of English football.
"I'd like to think that when I look at that league, there's a lot of teams that are not as good as Wednesday. If you offered them mid-table, I think they'd take that," he added.
Wednesday claimed a 3-3 draw from their trip to Burnley last night.
Chris Waddle was speaking ahead of ESPN's live and exclusive coverage of Newcastle United vs. Bordeaux in the Europa League at 8pm on Thursday, October 4. Visit espn.co.uk/tv for details.