The Professional Footballers' Association chief executive outlined a proposal for an overhaul of the transfer system at the union's AGM in Manchester, warning that the freedom given to players by the European Court's ruling last December could bring down the British model.
At the moment, players are able to move between clubs from one European Union country to another at the end of their contracts without a fee being paid.
British authorities have insisted that the Bosman ruling does not affect domestic transfers, with fees being agreed between clubs or by an independent tribunal when contracts expire.
But Taylor painted a bleak future unless the spirit of the European decision is accepted, insisting that the British system could also come under challenge if a universal model is not developed and adhered to.
Taylor added: "There's different rules and regulations and if we are not careful we are going to end up with anarchy. We'll have Fifa transfer rules, Uefa rules, European Union rules and so on.
"Our system is open to challenge. One in Norway didn't succeed, but we must refine our system to embrace Bosman while encouraging clubs to continue with and develop youth schemes. If we don't, then we'll see the demise of lower division clubs."
Taylor unveiled an idea being mooted by worried player union chiefs throughout the EU which has been developed to face up to the realities of Bosman.
It is hoped that players will be taken on five-year training contracts at the age of 16. At 21, they will either be offered further three-year deals or released. At 24, they will have complete freedom to move elsewhere. If the clubs decide not to invoke their three-year right at 21, the player is allowed to move on, but if he turns down the contract then he will be subject to a transfer fee.Reuse content