The Three Lions were put on the brink of an early plane back from Brazil following a 2-1 defeat to Uruguay in Sao Paulo on Thursday night, where Liverpool striker Luis Suarez netted a late winner after Wayne Rooney's equaliser.
It was a second Group D loss and England's exit will be confirmed should Italy fail to beat Costa Rica on Friday.
Scholes - capped 66 times for England and whom Fabio Capello tried to bring out of retirement ahead of the 2010 World Cup in South Africa - is in no doubt of the main reason why Roy Hodgson's squad could not deliver when it mattered.
Writing in his blog for www.paddypower.com, former Manchester United star Scholes said: "Going into the tournament we all feared the back four were never not going to concede goals - and now it has been proven.
"There is no way you can blame Steven Gerrard for not getting more on the ball from a header in the middle of the park for Luis Suarez's second goal. The defenders didn't sense the danger.
"Roy is close to finding something - but he needs two young centre-halves that have the balls to play, the balls to step into midfield now and again and full-backs who can defend.
"We have got two full-backs now in Leighton Baines and Glen Johnson who are great going forward - but we've got great forwards already. We need solid defenders and we're not blessed with great talent in this area.
"Not bringing Ashley Cole was probably a mistake - not so much for his attacking qualities - but more his defensive ones.
"I think Baines and the whole of the back four have been found out a bit. It has been argued that John Terry could have steadied the ship and taken command - but he's not getting any younger either.
"Ideally what was needed was a young John Terry and a Rio Ferdinand in his prime to marshal the defence."
Scholes, 39, feels Everton starlet Ross Barkley, who impressed again when coming off the bench against Uruguay, should start against Costa Rica, in what could well be a dead rubber.
"I have said before that he'd be in my team but play him in the centre like he does for Everton - not out wide as a replacement for Raheem Sterling," Scholes added.
"He'd be a direct replacement for Jordan Henderson. He's a good lad and has done okay, but has nowhere near the quality that Ross Barkley has.
"The Everton man would be a perfect fit for that central midfield role and would take a lot of the heavy lifting off Gerrard's shoulders.
"He can play off Gerrard, bomb forward, beat a man - give and take a pass. He'd be ideal for Wayne Rooney too and they could strike up a good partnership."
"There's also Luke Shaw. Let's see how he handles the big occasion. The sad thing is it may be too little too late now to make these changes."
I obviously watched a different game - I can't remember anything notable about Barkley's play against Uruguay. As to his defensive capabilities, I can't remember much notable about his showing over last season.- paulonbooks