The Ibrox side had to reapply to the SPL after oldco Rangers suffered liquidation. However, the clubs voted almost unanimously against the proposal.
After starting in the old Division Three, it took Rangers four seasons to make their way through the leagues before reaching the top flight, and they’ve since struggled to one third place finish and are on course for another this term.
Lambert believes all of Scottish football has been negatively impacted by the decision.
He told beIN Sports: “I think it was the worst decision to demote Rangers three leagues. It wasn’t good for the Scottish game, the Scottish league and certainly not for the national team.
“Celtic and Rangers, in years gone by, provided a lot of players for the national team and it’s mainly Celtic now. That’s the bigger picture and people hadn’t really thought it through. Nobody thought, ‘Well how is this going to affect Scotland, the league itself, Glasgow as a city?’
“I think it was the wrong decision to put them down three leagues.”