Australia coach Guus Hiddink insists the referee was wrong to award a last-gasp penalty to Italy as the Socceroos slumped out of the World Cup at the first knockout stage.

Italy won 1-0 to clinch a quarter-final clash with Ukraine but only after a dramatic game which saw them reduced to ten men at the start of the second half when Marco Materazzi was dismissed.

They were then awarded a stoppage-time spot-kick when Lucas Neill was adjudged to have brought down the Azzurri's Fabio Grosso but Hiddink thought it was a harsh decision.

"Even when Materazzi was on the park we controlled parts of the game and then when he was sent off, we assumed full control," said the Dutchman who is set to take charge of Russia.

"Then we fully dominated against a team that is much more highly ranked than us, before we got caught out in the last minute and, if you see the replay, there is no doubt it wasn't a penalty.

"We tried to play another style, a style that is more attractive for the spectators. The Italians wanted to play defensively - they don't think about attractive football, they just think about the result.

"But our crosses weren't good enough in the ultimate phase and as a consequence we didn't score any goals. We had to use the wings more and the move the ball more laterally."