Lucas Neill insists Australia will revel in their underdog status when they take on Italy in the second round of the World Cup finals.

The Socceroos qualified for the knockout stages for the first time with a fiercely contested 2-2 draw against Croatia in Stuttgart on Thursday.

Neill, Australia's standout player in the group stage, believes the team showed against Croatia, and in the earlier matches against Japan and Brazil, that they are capable of competing with anyone.

"We're the underdogs but everyone loves the underdog," said the Blackburn Rovers defender.

"Why should we fear them (Italy). We've got as many strengths as they do, we're playing with plenty of confidence and we've got nothing to lose."

The battling display against Croatia also convinced Aussie captain Mark Viduka that victory against Italy is a realistic target.

"Italy are a very good team, obviously. They've got so much experience at the World Cup and it's going to be very difficult," said the hard-working striker.

"But we're on a high and we fancy ourselves as well. We're treating every game now as a cup final."