Shilton, England's most capped player, understands the Football Association's delay because of the club-versus-country conundrum, although he believes it is not beneficial ahead of Euro 2012.
But the former Nottingham Forest goalkeeper can see that stance altering if it becomes apparent Spurs are going to fail in their bid to qualify for the Champions League.
Shilton said: "There is this situation where Harry might be going for the Champions League spot and so he wants to be loyal to the club.
"But maybe the fact Spurs have had a dip in form could be a blessing for England.
"Maybe they (the FA) think they can announce it a bit earlier if Spurs are not going to qualify for the Champions League.
"But the sooner the better. It is a bit of a dilemma and you can understand the FA because they've got this club-versus-country situation.
"For the England fans and team, it has got to be done as soon as possible."
Interim manager Stuart Pearce yesterday confirmed he would be naming the squad on May 10, unless specifically told not to by the Football Association.
That date can be pushed back should the FA believe they can get their preferred candidate at the end of the season, with UEFA's final cut-off being May 29, between two friendlies against Norway and Belgium.
Pearce believes it would be fairer to the players if they were informed before the season comes to an end, something Capello did not seem too bothered about.
Capello was also criticised for naming a 30-man World Cup squad initially, with some claiming it created an uncertain atmosphere at the pre-tournament training camp in Austria.
However, the FA are reaching a point when they need to make an approach and, having stood off since Capello's resignation in February, could reach a stage where they have to take decisive action no matter what the position of individual clubs.
Shilton wants England to act quickly, particularly with Pearce indicating he is not ready to take the role on a long-term basis.
He said: "Although I played with Stuart and he has been involved with the FA a long time, the England fans deserve to have the man who is taking them forward for the next four years.
"Stuart, by his own admission, although he is 50, doesn't see himself as the man.
"I am also hoping by getting the new man in you will get that reaction you always get from the team when a new manager takes over.
"There is a bit of a spark, a bit of enthusiasm, you want to prove a point.
Shilton would have opted for Sunderland boss Martin O'Neill as Capello's successor but can see the merits in Redknapp and has called for an end to the constant under-achieving by England at tournaments.
He said: "I've felt for a while now that England should have been doing a lot better. I've not been totally impressed with the managers they've had.
"Although Capello's record is very good, it just wasn't right for the last World Cup with his preparation.
"I would have gone for Martin O'Neill. He has won things. He's a winner and gets the best out of people.
"I think he may have played a bit more of a British style with a bit of continental style in it, but a style that was effective.
"But Harry would be my choice if it was an English manager. It's his time. I know Spurs have had a dip in form but Harry is going to play football the right way.
"He will have the players' respect. He will pick players who play football and can entertain the public as well."