The Azzurri will now play Germany in the semi-finals.
Kiev: England suffered yet more penalty heartbreak, this time at the hands of Italy as they succumbed to an agonising 4-2 defeat on spot kicks in a goalless Euro 2012 quarter-final here.
Italy dominated the match but wasted a host of chances in normal time thanks to some brave last-ditch Three Lions defending, and Roy Hodgson’s side managed to see out the extra 30 minutes before the inevitable shoot-out many predicted.
Riccardo Montolivo and Ashley Young both missed penalties before Gianluigi Buffon saved from Ashley Cole, and substitute Alessandro Diamanti scored the winning penalty to send the Azzurri into the last four.
England named an unchanged side from their win over Ukraine, with Hodgson keeping Danny Welbeck in the starting line-up, while Cesare Prandelli opted to start Mario Balotelli ahead of Antonio Di Natale for the Azzurri. Leonardo Bonucci came in for the injured Giorgio Chiellini and Thiago Motta was replaced by Riccardo Montolivo.
Both sides had glorious chances in the opening minutes. Daniele De Rossi struck the post from distance before Glen Johnson shot straight at Gianlugi Buffon from six yards.
Johnson was looking lively down the right flank, and a superb early cross found Wayne Rooney who couldn’t quite direct his header on target, but it was a positive opening 15 minutes from England.
Prandelli’s side started to enjoy more possession, however. Balotelli was denied by a superb John Terry challenge when it looked like he was through one-on-one. Montolivo then lifted a delightful ball into the path of Balotelli, who fired an improvised volley straight into the arms of Hart.
England then swept up the other end with a fine counter-attacking move, and Rooney played the ball into the path of Welbeck, but the young Manchester United striker disappointingly side-footed well over the bar.
Balotelli almost had another opening after Pirlo played a superb ball towards Cassano, who headed back across goal, and only a fantastic last-ditch tackle from Lescott denied the Manchester City striker.
Early in the second half, De Rossi volleyed wide from just yards out with the goal at his mercy after a Hart punch was headed back into the box, and Italy then had two chances in quick succession after Hart parried a long-range strike into the path of Balotelli, but the Three Lions shot-stopper saved low before Montolivo blasted high.
Ashley Young scuffed a shot wide before Rooney almost flicked a Gerrard free-kick goalward as the game entered the final 15 minutes, but it was a rare foray forward from a tiring England side.
Former West Ham striker Diamanti came off the bench and tested Hart straight away, firing a low strike towards his near post, but the England number one stopped well. Then another substitute, Antonio Nocerino, was only denied by an excellent Johnson block.
Rooney had a chance to win it in stoppage time, firing over with an acrobatic effort after Carroll headed back across goal in a positive passage of play, but the game moved inevitably into extra time.
The tension clearly started to set in as extra time got underway, with neither side wanting to make that one crucial mistake. Balotelli drove another tame effort towards Hart as England still struggled to keep possession.
A Diamanti cross evaded Hart and struck the far post before Walcott produced a dangerous run into the Italy area, but couldn’t find Carroll with his chipped cross.
Diamanti wasted another glorious opportunity, blasting wide having been found in space inside the box before Nocerino had a goal ruled out for offside after heading in a Diamanti cross, and Hodgson’s side somehow held on for the shoot-out.
Montolivo drilled his penalty wide of the left-hand post before Young blasted against the crossbar. Buffon then saved Cole’s tame effort and Diamanti hit the winning penalty to set up an Italian encounter with Germany in the last four.