There are doubts over Dalglish's credentials as Reds boss after a dismal 2012 so far in the league.
But Shearer wrote in The Sun: "There is no doubt the league campaign has simply not been good enough — but the cups could provide salvation.
"They desperately need the FA Cup to ensure that. If not what do you do, get rid of Dalglish?
"The criticism some would have is that he has been out the game too long and lost touch.
"I have worked under him at both Blackburn and Newcastle and, believe me, this is a man who would not lose touch with the game if he was on the moon.
"He studies it whether in it or out, if there is a park game going on around the corner he would watch.
"This is not a man who has lost touch with football."