Walsh, who has no acts left in the competition, described 17-year-old Lily as a "ready-made popstar".
Lily was eliminated from the contest in week one by her mentor Kelly Rowland, but was given a lifeline by the public when she was voted back in as a replacement for Frankie Cocozza.
She will face Marcus Collins, Little Mix and Misha B in next week's semi-final.
Praising the Teeside singer, Walsh said: "I think they have all worked hard but the one that stands out for me is Amelia.
"There is something different about her and I think she's a ready made popstar. I've always liked her."
Walsh also defended quarter-final eliminee Janet Devlin, who was criticised by one viewer phoning into The Xtra Factor for being "boring".
"I don't think she was boring at all," said Walsh. "I think she's got a brilliant recording voice. but she wasn't great last night on either song."
> Janet Devlin voted out of The X Factor
> Little Mix top X Factor Digital Spy poll