Spurs suffered a second successive defeat in the Champions League on 2 November as Kevin Kampls goal condemned the north London club to a 1-0 defeat against Bayer Leverkusen at Wembley.
The loss extended Tottenhams winless run to six matches in all competitions and leaves them facing an uphill battle to reach the knockout stages of Europes premier club competition.
Walsh described his former clubs performance at Wembley as a debacle and warned that the weekend trip to Arsenal could be a painful experience for Spurs fans.
Its definitely the worst performance of the season – the worst I can remember in a long time, he told Sky Sports.
I liked the look of the team on paper but in an important game, no one turned up.
Its hard to know why, unless over the last few games the confidence has waned a bit and suddenly its just caught up with them.
I was expecting Tottenham to win, moving the ball quickly and with confidence, but wheres their confidence gone?
Its a big game at the weekend. If youre an Arsenal fan watching that youll be rubbing your hands together, Walsh added.
The fact it is a derby gives you the chance to roll your sleeves up and raise your game. Its a leveller but Tottenham will have to raise their level if theyre going to get anywhere near Arsenal.
In the absence of the injured Harry Kane, Tottenham have only scored three goals in their last six games in all competitions.
The England international returned to training this week and could play against Arsenal, but Walsh cautioned that Spurs troubles extended deeper than the absence of one player through injury.
Its not about one player, its about a team. Harry Kane wasnt particularly at top of his game when he got injured and suddenly were asking if hes the saviour. Its collective. Id say [Toby] Alderweireld being missing – a leader at the back – is more important, he said.