New Zealand achieved their greatest footballing result on Sunday holding on for a stunning 1-1 draw against defending champions Italy in their World Cup Group F match.

The All Whites - who lost all three of their matches on their previous appearance in 1982 - took a shock lead through Shane Smeltz in the seventh minute only for Vincenzo Iaquinta to level through a penalty later in the first half.

The draw puts both teams on two points with just a match remaining. The Kiwis will play group leaders Paraguay while the Italians play bottom side Slovakia on Thursday.

The Italians laid siege to the All Whites' goal for most of the second half but a combination of resolute Kiwi defence, brave goalkeeping by Mark Paston and errant passes condemned the reigning champions to their second consecutive draw of the tournament.

As much as the four-time champions pressed they could not come up with the winner and the Kiwis came close to pulling off an unbelievable victory when substitute Chris Wood fired centimetres wide with seven minutes left.

"I think that has stopped our nation of four million people," New Zealand coach Ricki Herbert said.

"It's an incredible result and it's way above anything we have achieved before against the stature of our competitors.

"Anything is possible and we're doing okay for a team who some say shouldn't be playing at this World Cup."

Italy coach Marcello Lippi said his team lacked "lucidity."

"We had a lack of lucidity, we paid the price for that and we weren't very fortunate," said. "The result is 1-1 so we just have to pull up our socks and win our next game because we don't want to go home early.

"We are in a difficult situation but we are not in a panic situation. We will have to win the next match. But I think we can make it to the next round even if we draw."

Rank outsiders New Zealand got just the start they were after when from a Simon Elliott free kick in the seventh minute Winston Reid got a flick onto Fabio Cannavaro's thigh for Smeltz to poke home past goalkeeper Federico Marchetti.

But the Italians hit back when left-back Tommy Smith was yellow carded after he brought down Daniele De Rossi inside the area and referee Carlos Batres pointed to the spot.

Iaquinta sweetly converted for the Azzurri to equalise after 29 minutes.

Lippi threw all his three substitutes into the action after 15 minutes of the second half in an effort to unlock the determined Kiwi defence.

Riccardo Montolivo drew a great flying one-handed save from Paston with 20 minutes left as Italy went all out for the winner.

But the All Whites kept their structure and composure repelling continual waves of Azzurri attacks, with skipper and defensive rock Ryan Nelsen outstanding and Paston pulling off some critical saves.

Italy's man-of-the-match De Rossi said his team had to find some improved teamwork to progress further at the World Cup.

"It's not great quality play. It's just a matter of attacking for the eleven players. It's teamwork, there was a great spirit, we had good ball possession, but not enough today," he said.

It was New Zealand's first draw with Italy after losing to them 4-3 in a friendly in their only other meeting before last year's Confederations Cup in South Africa.

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