Stuart Beavon gave Wanderers an early lead but Nicky Wroe turned the match around with two goals for the visitors before Elliot Benyon sealed the win late on.
Waddock said: "It was very painful to watch. We were taught a lesson by Torquay, who were excellent from start to finish. The way they moved the ball and the way they competed meant we came out second best.
"But, without a shadow of a doubt, that is the worst we've played this season and we were second-best all over the pitch. Credit to them for the way they played but I have to say we made it very easy for them and I'm very, very disappointed.
"Our defending all night from front to back was extremely poor and it's a performance that I didn't see coming and I've said that to the players. Once again when we've played at home, the performance and the result hasn't happened and of course it is a concern.
"If it wasn't for goalkeeper Nikki Bull it would have been a lot worse and he's made a lot of saves to stop it from being an even worse scoreline."
Source: PA
Source: PA