Shrewsbury fell to a 2-1 defeat at second-placed Peterborough.
In what was an even game throughout, Town took the lead just before half-time thanks to an excellent strike from Jordan Shipley.
But goals from Joel Randall and Josh Knight won it for the hosts as they continued their push for promotion.
Team news:
Boss Taylor made four changes from the team that took on Stevenage last weekend - with one coming in goal where Harry Burgoyne replaced the injured Marko Marosi.
Tom Bloxham also made his first league start of the season with the academy graduate having been recalled from his loan at Morecambe.
In a 3-4-2-1 formation, Bloxham lined up alongside Jordan Shipley in the number 10 role with Max Mata up front.
In defence, Morgan Feeney, Chey Dunkley and Jason Sraha were the centre-backs with Carl Winchester at right wing-back and Mal Benning on the left. Nohan Kenneh and Taylor Perry were the midfield two.
Peterborough, under the guidance of Darren Ferguson, lined up in a 4-2-3-1 system with Ricky-Jade Jones the lone striker.
Joel Randall was in the number 10 role with David Ajiboye and Ephron Mason-Clark on the wings.
Report:
In what proved to be a thoroughly entertaining opening 45 minutes, it was the hosts who created the game's first chance when a swift counter ended with Jones being slipped in on goal.
Burgoyne, though, was alert to the danger and - after racing off his line - produced a fine stop to deny the striker.
Town responded and had a glorious chance of their own when Perry darted into the box and arrowed a fierce low drive towards the bottom corner.
But Peterborough goalkeeper Jed Steer did really well to get down and parry the ball away.
Just over five minutes later, the ball fell to Shipley on the edge of the box. But his half-volley sailed over the bar.
Peterborough thought they had opened the scoring just before the half-hour mark when Jadel Katongo’s cross found Mason-Clarke.
He then produced an acrobatic effort that was cleared off the line by Feeney.
Moments later, Jones’ went through once again. But just as before, Burgoyne proved equal to it with the goalkeeper making another smart stop.
On his return to the side, Bloxham was causing Peterborough problems whenever he got on the ball - with the forward so close to picking out Mata with a dangerous cross.
Just before the break, though, Town did get themselves ahead when - from the edge of the box - Shipley produced a sensational strike to arrow the ball into the bottom corner on the half-volley.
Unlike the first-half, chances proved few and far between after the interval.
But Peterborough did enough to turn the game around in their favour.
In the 51st minute the hosts pulled level when Katongo’s cross picked out Randall at the back post who tapped home from close range.
Ferguson's side then went ahead when Burrows’ corner was nodded in by Josh Knight.
Town had a glorious chance to pull level when Shipley produced a thunderous drive from inside the box that flashed inches wide.
Taylor's men threatened again just before the 90 minute mark when Bloxham ventured down the right before putting in a dangerous cross.
The ball hit Ronnie Edwards and could have gone anywhere but flew just wide of the post.
Town continued to push from that point, but with men being thrown forward, Posh almost grabbed a third when Randall was slipped in but then hit the post.
Teams:
Shrewsbury: Burgoyne, Feeney, Dunkley, Sraha, Benning, Winchester (Sobowale 87), Kenneh, Perry (Idowu 70), Bloxham, Shipley, Mata (Bowman 70).
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