Taylor pointed out that the players would agree to defer their pay until the end of the season, only after Leeds had explored every other option first.
This included the possibility of Sheikh Abdulrahman Al-Khalifa or Allan Leighton putting some money into the club before Monday.
News that the first-team squad had refused to accept this proposal will have come as a huge blow.
The most obvious solution now is to sell, most likely Alan Smith or Paul Robinson, in order to raise the funds required through to the end of the season.
Taylor said: "Just a few days ago they were told their wages weren't going to be affected.
"Then suddenly they are being asked to help provide the money to keep the club going, and we're talking £3.5m to 5m, which is no small change.
"For Premiership players that is something they weren't expected to have to accept.
"I hope you can understand that as Premiership players they had every right to expect that when they were offered their contracts, they would be fulfilled."
Birch is today faced with the prospect of being forced to sell off the few remaining stars after his plan to defer players' wages was rejected. "To be fair we discussed that, " Taylor added on Sky Sports News
"The players aren't naive. They know there are players who would be of value to other clubs and they appreciate that at the moment the vultures are hovering.
"The club, if they do get offers, realise the value of a player as well and don't want their best players to be virtually given away.
"But there are a number of options open to the club before the end of this month and they want to wait to see if those options are taken.
"If not, then as a very last resort, I can assure you the players will be prepared to play their part and make sure the club continues for this season."