The Scot took the reins at Villa Park last summer, but his first season has been a struggle against relegation with a relatively young squad.
Taylor believes that Lambert will keep the Villans in the Premier League, but still thinks that he should keep his job even if they drop into the Championship.
"I think Paul has handled the season well, and there's a definite sense this is a work in progress," Taylor told The Telegraph.
"I believe they will stay up but that Wigan game [on the final day of the season] does have the D-day look about it, at the moment.
"If they were relegated, I think they'd be well advised to stick with Paul. Please stick with him, because he's got young boys there and bought players that in the main have done it for him."
Villa are three points above the relegation zone with four games remaining.