Wanderers took the lead through Stephen Ward's fourth-minute effort but defended poorly thereafter - a Sean Scannell strike and two from Jermaine Beckford sealing a solid win for the visitors.
Saunders' men now sit second from bottom with four games to play - and he has set his side a goal of three victories from their remaining fixtures.
He said afterwards: "It was a really disappointing result because it was such a big game. But what we have to do now is win on Tuesday (against Hull City) and hope the results are reversed.
"We have to probably win three games out of the last four which we are capable of doing and we have done it in the past.
"Against Huddersfield I thought we kept battling even when we had a man off. We kept going and we didn't roll over, which we could have and got beaten by six like Barnsley.
"And as I have said all is not lost, we have to win three out of four. We have done it and are capable of doing it. But it is amazing all these teams around us that keep winning."
On the dismissal of Jamie O'Hara, who was given his marching orders for an altercation with Keith Southern, Saunders added: "Jamie got sucked in. He got pushed in the back. Jamie has raised his hands but he (Southern) shouldn't be proud of himself for the way that he has gone down.
"It is a red card. If you raise your hands it is a red card. But we spoke about that before the game about keeping your discipline in a game with that much on it.
"Jamie has not punched him, he just pushed him. But he has gone down as if someone has shot him. It was a bit of gamesmanship."