Wallace - who stuck by the club following the liquidation meltdown - has made just one substitute appearance this term but his treatment was branded “disgusting” by one angry shareholder.
But Gerrard said: “As the manager of this club, and I have been since June, I came into (a situation with) Lee Wallace. He was out injured and had missed 12 months of football.
“I have to pay my respects to Lee in terms of his professionalism while he’s been injured and the hard work he’s put in trying to get match fit.
“But at the moment, to be really candid, he’s still part of the plans while he’s here but I have better options in that position.
“My relationship with Lee is fine. He trains with us every day and he is working very hard to regain his place in the team. That’s where that situation is.”