Nelspruit (South Africa), June 20 (DPA) Minnows New Zealand held Italy to a 1-1 draw Sunday in yet another football World Cup upset that has seriously dented the reigning champion's chances of topping Group F.

In front of 38,200 spectators at the Mbombela Stadium here, the All Whites took a surprise early lead with Shane Smeltz, who took advantage of a defensive slip by ageing captain Fabio Cannavaro to tap in from close range.

Italy poured forward but could only manage an equalizer through a well-struck penalty by Vincenzo Iaquinta in the 29th minute.

From there on, the game provided plenty of ammunition to those who argue that more forwards doesn't necessarily mean more goals.

Despite playing with three strikers and substituting the ineffective Alberto Gilardino after the break, the Azzurri lacked the creativity of a player like midfielder Andrea Pirlo - who is out injured - and could only manage a few finishes from long range.

"After they scored the first goal we did our best to equalize, but what we did was not enough," Italy coach Marcello Lippi said.

Riccardo Montolivo, who faced the difficult task of replacing Pirlo in Nelspruit, said what has been on the mind of most Italian fans since the team's 1-1 draw against Paraguay in the opening match: "We have to improve our finishing."

The Kiwis, by contrast, were celebrating after yet another gritty performance that earned them a second draw in as many games.

Sunday's result leaves Italy with just two points. And with Paraguay firmly in the lead on four points after a 2-0 win over Slovakia earlier in the day, the Italian's chances of winning the group now look extremely slim.

Before the match, Lippi had asked for plenty of goals from his boys.

But the 2006 World Cup winners were made to work hard for it by the All Whites, whose confidence was boosted by their unexpected 1-1 draw against Slovakia in their opening match.

In fact, it was the underdogs who produce the first shocker after just six minutes: Simon Elliott, not far from the half-way line, curled a free-kick into the Italian area that Cannavaro failed to clear. The ball ended in the path of Smeltz, who had no problem tapping it in from a few yards.

The Italians protested a suspect offside position, but it was ultimately a dreadful mistake from the Azzurri's 36-year-old captain that handed New Zealand the lead.

The goal shook the Italians, who poured furiously into the New Zealand area.

In the 16th, Juventus defender Domenico Chiellini was offered a great chance, but he misfired a cross instead of rifling in from close range.

Then it was the turn of fellow defender Gianluca Zambrotta to narrowly miss the target with a well-struck right-footer from the edge of the box.

And in the 26th, Montolivo struck the post with a thundering finish.

Montolivo's effort was only the prelude to Italy's goal, which was to come off a penalty three minutes later after New Zealand's Tommy Smith pulled Daniele De Rossi's shirt inside the box.

Iaquinta - eager to end a prolonged goal draught with the Azzurri - skillfully converted the penalty by sending the ball to the right and keeper Mark Paston to the left.

From that moment on, Italy started piling the pressure, with the New Zealanders happy to just get the ball away from their area while rarely venturing outside their own half.

Lippi made two changes during the break, bringing outgoing Serie A top scorer Antonio Di Natale and Mauro Camoranesi for Gilardino and winger Simone Pepe.

But the move produced little effect, with the New Zealanders happy enough to continue to frustrate the Azzurri.

Lippi, growing more and more nervous, decided to bring in a third striker, Giampaolo Pazzini, for Claudio Marchisio, a midfielder.

But it was actually the New Zealanders who could won the game with a couple of great finishes from Ivan Vicelich and Chris Wood that ended not far off target.

"We played with a lot of heart, and I think the guys are disappointed that it only ended in a draw," said New Zealand defender Ryan Nelson.

Italy face Slovakia in their final game while New Zealand could produce the ultimate World Cup fairytale if they defeat Paraguay Thursday.