Sherwood signed an 18-month contract at White Hart Lane back in December after Andre Villas-Boas was sacked by the club.
However, Spurs' fading hopes of Champions League football have seen the 45-year-old's future come under question in recent weeks.
Despite concerns over his ability to manage in the Premier League, Mabbutt believes that Sherwood is the right man to help the team progress.
"I think Tim's been given a great opportunity by the chairman, he's got an 18-month contract to prove he has the credentials to move the club forward," he told Shoot.
"As a player he never shirked a challenge and he's taken the same approach into management. You've seen in post-match interviews that he's very passionate and that's Tim, that's what you get with him."
Tottenham return to Premier League action on Sunday when they travel to Liverpool.