"The next two games will be crucial for us," says the Italian. "We have to win at West Brom and I believe we can stay up.
"Everybody is depressed, not only the fans, but we don't have to let the pressure beat us.
"We have to believe - and we do.
"I still think we have a chance and that is not just words for the sake of it.
"We will show it in two weeks time when we play West Brom."
Paolo says that West Ham didn't get the breaks at Elland Road and adds: "In the second half we showed we should have got something but unfortunately we were unlucky.
"I think the gods helped us, though, because West Brom and Bolton drew at the weekend, so after a bad result at least there was one good sign."
Paolo started only his third game of the season alongside Fredi Kanoute at Elland Road - a factor which Glenn Roeder believes has been a big influence on the way fortune has been this campaign.
With Fredi facing a three match ban for his sending off on Saturday, it will be quite a feat now if the pair can break double figures together.
Of the red card, Paolo admits: "I didn't see what happened but I am sorry for Fredi because he has just come back and now he will miss a few games which is not good for him or us.
"I don't think he did anything 'incredible' - I didn't see anything, to be honest, so I don't know what happened."