Lambert is appalled at some of the criticism aimed at O'Neill since his departure from the Stadium Of Light late last month and backed him to make a quick return to top-flight football.
O'Neill came under fire from Sunderland chairman Ellis Short, who said he was left with no choice but to fire the Northern Irishman, and his replacement Paolo Di Canio joined in the criticism by saying the squad he inherited was unfit and full of perennial underachievers.
Lambert spent a number of seasons playing under O'Neill at Celtic and launched an impassioned defence of his mentor's record and tactics.
"It's shocking. It's awful to hear some of these things being said - and it's probably people who haven't been a manager who are calling him these things," Lambert said in the Daily Star Sunday.
"Listen, I worked under Martin at Celtic for five years and he was a breath of fresh air up there. He was absolutely brilliant. He took Celtic by the scruff of the neck when it was dead on its knees, got us to a European final and winning trophies again.
"That was a really tough thing to do in that period because Rangers were a really good side then. A top, top team.
"I've spoken to Martin since he left Sunderland and he's fine. And I am sure he will be back in the game soon."
O'Neill was linked with two jobs, neither of which are vacant at the moment, in the Sunday papers, with Leicester and Stoke City mentioned as two possible clubs he could end up at by the start of the 2013-14 season.