Warriors were rocked by two lightning quick starts to each half by the Exiles as they claimed victory at the Madejski Stadium.
Director of Rugby Ruddock must now pick up his side ahead of the local derby with Gloucester and knows boosting confidence was top of his agenda.
"We have a dressing room that was full of intent and promise before the game, but at the end of the game we have one low on confidence. We have to try and pick them up for next week," he said.
"It is a game of confidence, you only have to look at Newcastle, it's the same team that we beat a few months ago when they had no confidence but now they are flying.
"There is a case for putting in new blood and fresh legs, players with points to prove in the coming weeks. James Collins did well when he came on, Callum Black was outstanding, Jonny Arr was good and Graham Kitchener ran hard.
"Having said that we have Gloucester next week and we have to be pragmatic, we must realise that we have got a lot of good players who on their day can perform.
"We have to get that mix in our selection to get that enthusiasm of youth with the experience and knowhow of the senior hands.
Ruddock admitted the start to both halves in Reading had been hugely costly to his side and left them chasing another game.
"It was a poor start from us and that is our biggest disappointment, we are chasing games again and on the back foot," he added.
"Irish started like a train but, although they cut us, we scrambled back well. Even though we were 6-0 down I thought we might keep our shape and frustrate them. But then a kick goes in behind us and our winger falls on the ball. The ball pops up and suddenly we are chasing the game away from home.
"That doesn't do any good for our confidence and certainly we looked like a team that is low on confidence.
"I thought they were wobbling at half-time, they had the ball and the opportunity to attack us but most of the time our shape had looked good. We were coping with their wide game and putting in our tackles.
"What we didn't want to do was let them score first after half-time but they did, unfortunately that was then a tough act for us then to chase the game.
"There is still much we can take from this season, just a few weeks ago we beat London Wasps and so we showed this time can perform and can beat other top teams.
"A few months ago we beat Sale away but since then we have lost Matthew Jones and Sam Tuitupou, we have struggled since if I am honest. We have brought players in on loan and tried to get players to adapt to our systems but it hasn't been ideal.
Warriors also lost Pat Sanderson to injury just after the interval and Ruddock revealed his skipper had been struggling with a hip injury all week.
"Pat had has a bad hip and couldn't do the team run and dropped out of another session," added Ruddock.
"His hip was not perfect and it affected his running style and his Achilles flared up at half-time.
"He was keen to continue as always, but once they got that try after half-time I felt it was time to give James Collins a run. We don't want our captain out for the rest of the season."
