Lambert, 38, took over at Adams Park in July 2006 and led the team to the Carling Cup semi-final, losing to Chelsea 5-1 on aggregate having held the Barclays Premier League giants to a 1-1 draw at home in the first leg.
But a dreadful end to the season, which saw them fail to win any of their last 11 games, culminated in a 12th-placed finish.
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