Scotland 1-2 Italy: Scotland fell agonisingly at the final hurdle in their Euro 2008 qualification bid as Christian Panucci's last-gasp header earned Italy a 2-1 win at Hampden tonight.

Alex McLeish's side needed to win to ensure a path to Austria and Switzerland next summer and, despite going behind just two minutes in, they almost overcame the reigning world champions.

Barry Ferguson's 64th-minute tap-in cancelled out Luca Toni's opener and James McFadden missed two late chances to win it for the home side before Panucci struck in injury-time.

The Scottish fans were rocking after a pre-match rendition of 'Flower of Scotland' but they fell dejectedly back into their seats after just 70 seconds.

Antonio Di Natale latched onto a quick throw in from the left, and in acres of space, he simply slid across the box for Toni to get ahead of David Weir and prod into Craig Gordon's top corner.

Remarkably, Scotland could have gone 2-0 behind a minute later when Toni again got into the box but Mauro Camoranesi fired over from eight yards following the striker's cutback.

McLeish opted to use a 4-5-1 system, with McFadden as a lone striker and Paul Hartley playing as a holding midfielder.

However, the hosts seemed overrun in midfield early on and Toni had another chance to extend Italy's advantage in the 13th minute, with Gordon tipping his angled drive around the post.

Scotland finally managed to settle from there and they went on to force a series of corners at the other end. Scott Brown had a penalty shout for handball waved away from one of them, while Alan Hutton sent a flicked header inches wide from another.

Both sides were playing at lightning pace but the next real chance did not come until just before the half-hour mark when Ferguson played a neat one-two with McFadden on the edge of the Italy box before firing weakly at Gianluigi Buffon.

Scotland then received a huge let-off at the other end when Di Natale's strike was, perhaps incorrectly, ruled out for offside.

Gordon pulled off an unbelievable stop to keep out Massimo Ambrosini's initial effort but Di Natale appeared to be comfortably onside when he tapped home the rebound.

A number of niggly fouls ensured the rest of the half was played out with little goalmouth action until the very last seconds when Weir had a header cleared off the line from Ferguson's corner.

The last thing Scotland wanted was to repeat their trick of the first half and concede an early second-half goal but Italy again took the initiative and went on the offensive.

And it needed a brilliant block from Hutton to prevent Di Natale's volley heading towards goal following Gennarru Gattuso's cross from the right five minutes into the half.

Scotland had caused problems from corners in the first half and Hutton got on the end of another one in the 57th minute but sent his header looping over the bar.

Hutton won the hosts a free-kick on the edge of area six minutes later and after McFadden's effort was deflected into the path of Lee McCulloch, he shot straight at Buffon from six yards. The Italy keeper could only spill the shot, though, and Ferguson reacted first to prod home and send the Hampden crowd into raptures.

They knew that only a win would ensure their qualification though and it was no surprise to see Kenny Miller introduced in place of Brown with 16 minutes remaining.

Italy were dropping deeper and deeper and Scotland really should have punished them as the last ten minutes approached.

A brilliant move sent McFadden clean through in the 79th minute but with three unmarked team-mates waiting to tap home, the Everton striker selfishly shot wide from a tight angle.

But it would all have been forgotten less than a minute later had he arrived a split-second earlier to fire into an empty net from Miller's low cross that evaded absolutely everyone.

Instead, the ball was virtually past him when he made contact and he ended on the turf with his head in his hands as the ball flew wide of the near post.

You could sense the dream died there and it was confirmed a minute into stoppage time when Panucci headed home from a Pirlo free-kick that should never even have been awarded to the visitors.