Taylor, who took over at the Abbey Stadium club in May last year and has led them to second place in the Third Division, met the Cambridge chairman, Reg Smart, late on Monday after being offered a two-year deal to replace Pat Holland, who was sacked.
Cambridge had refused to offer to extend his contract - which runs out in August - until after his meeting with Orient's chairman, Barry Hearn.
And while Smart responded yesterday with an improved offer of an 18-month deal with an option of a two-year extension, Taylor made it clear that it was too little, too late.
"I would have accepted the offer if they had made it a week ago because I didn't want to leave Cambridge, the players and the supporters," Taylor said.
"But this new offer only came as a panic measure after they heard what I had been offered at Orient.
"I wasn't impressed by the way it came about and I felt in the end I had to leave as a matter of principle."
Taylor, a West Ham team-mate of Holland in the Hammers' 1975 FA Cup final victory over Fulham, will finalise the details of his Orient contract today before putting pen to paper at the club he first joined 30 years ago on Thursday morning.
But he left behind him an angry Smart. "I worked hard overnight to get him the improved offer but in view of what he's said maybe it's better that he moves on," Smart said.
"I had a long discussion with Tommy. I felt he was unsure about the move and that it was maybe in his best interests to stay with us.
"After he left I immediately got in touch with the other directors to reconsider our offer, but he'd made his decision within 20 minutes of speaking to me this morning."
While Taylor was set to arrive, there were three departures from Brisbane Road, with former vice-chairman Derek Weinrabe and fellow directors Harry Linney and Vince Marsh all resigning. Hearn hopes to bring new faces in shortly.Reuse content