Sooner or later, a player character will change alignment. A character might change alignment for many reasons, most of them have nothing to do with the player "failing" to play his character's role or the DM "failing" to create the right environment.
Player characters are imaginary people. But, like real people, they grow and change as their personalities develop. Sometimes circumstances conspire against the player character. Sometimes the player has a change of attitude. Sometimes the personality created for the player character just seems to pull in an unexpected direction. These are natural changes. There might be more cause for concern if no player character ever changes alignment in a campaign.
There is no rule or yardstick to determine when a character changes alignment. Alignment can change deliberately, unconsciously, or involuntarily. This is one of those things that makes the game fun. Players are free to act, and the DM decides if (and when) a change goes into effect. This calls for some real adjudication. There are several factors to consider.
Deliberate Change[]
Deliberate change is engineered by the player. He decides he doesn't want to play the alignment he originally chose. Perhaps he doesn't understand it, or it's not as much fun as he imagined, or it's clear that the player character will have a more interesting personality with a different alignment.
All the player has to do is have his character start acting according to the new alignment. Depending on the severity of the actions and the determination of the player, the change can be quick or slow.
Unconscious Change[]
Unconscious change happens when the character's actions are suited to a different alignment without the player realizing it. As in the case of a deliberate alignment change, the DM must keep track of the character's actions. If the DM suspects that the player believes his character is acting within his alignment, the DM should warn the player that his character's alignment is coming into question. An unconscious alignment change should not surprise the player—not completely, anyway.
Involuntary Change[]
Involuntary alignment change is forced on the character. Most often this is the result of a spell or magical item. Involuntary changes are immediate, and the character's previous actions have little bearing on the change.
Charting the Changes[]
During the course of play, keep notes on the actions of the player characters. At the end of each session, read through those notes, paying attention to any unusual behavior. Note which alignment seems most appropriate to each character's actions.
If, over the course of several playing sessions, a character's actions consistently fit an alignment different from the character's chosen alignment, an alignment change is probably in order. If small actions are taking a character outside his alignment, the change should be gradual—maybe even temporary. Severe actions could require an immediate and permanent alignment change.
In the meantime, the paladin could recognize his danger and amend his ways, preventing the change and preserving his paladinhood. If the paladin burns the village to prevent the disease from spreading, he commits a seriously evil act.
In this case, the DM is justified in instituting an immediate alignment change to lawful evil or even chaotic evil. The character eventually might be able to change back to lawful good alignment, but he will never again be a paladin.