Former England Under-21 boss Taylor has vast experience at a higher level with the likes of Leicester, Hull City and Brighton.
He also famously made David Beckham England captain in his one game as caretaker manager for the Three Lions.
Daggers’ issues are well documented but he admits it won’t be easy turning things around.
“It’s a difficult situation for the club and it’s a test for everybody but it’s something I’m looking forward to, to see if I can push the club on,” he said in an interview on the club's website.
“I’ve know this club and the people for a long time. I’ve always had a good feeling while I’ve been at this football club.
“I’ve always liked coming here and I’ve always trusted the people on the board. Now I’m here again, I’m looking forward to it.”
Taylor is familiar with his assistant Terry Harris, with the two having previously worked together at Dartford in the eighties before Taylor started his management career.
“I’ve known Terry a long time and we worked together for four years at Dartford where we were successful,” he added.
“I’m delighted to be back with him, he’s got great experience and he knows a lot more about Dagenham than I do.”
The Daggers have struggled off the pitch of late with financial instability since Glyn Hopkin withdrew funding for the club part way through last season.
It’s a situation that makes long term planning difficult, and for the manager the coming weeks are all about working within their new constraints to build a side worthy of the National League.
The duo replace legendary manager John Still, pictured, who has joined his old club Barnet.
“We’ve got to get a lot of players in if we can. It’s a lower budget but we’ve just got to be realistic on that,” he added.
“We know the task ahead. We’ve got to try and play out the best possible team we can.
“At the minute, the plan is to get enough good players to join us for pre-season so we’re going to have lots of trials to produce a decent team for the start of the season.
“Hopefully at the end of the season, we will have had a year’s worth of work with them and we can push on from there.”
Terry Harris also spoke of his delight about joining up with the Daggers again, adding that he wasn’t worried about the club’s problems.
“It’s fantastic to be back, this has always been my club anyway. I only live down the road," he said.
“I understand all that’s gone on but I have no control over that. The situation [with transfers] is that we will have to go young and through our contacts hopefully we will get enough good players in to make it a good season.”