The Spanish team had not been beaten at the knock-out stages of the Championships since 2004, but found themselves on the back foot early against an Italian side, primed for revenge for their 4-0 defeat in the 2012 final.

Graziano Pelle nearly gave the Italians the lead in the opening minutes but was denied by a superb save from David De Gea, with the goalkeeper then turning an effort from Emanuele Giaccherini onto the post.

He was, however, culpable when Italy made the breakthrough as De Gea spilled a low free-kick back into the box, with defender Giorgio Chiellini poking home from close range.

As the game became stretched in the second half, Eder missed a golden chance to put the match beyond Spain but missed when sent clean through on goal, before Gianluigi Buffon made two fine saves to preserve Italy’s advantage.

With time running out on Spain’s title defence, Italy hit their rivals on the counter-attack in the fine moments of the tie, with Pelle firing in from close range to seal a 2-0 victory for his side.

Italy will now meet world champions Germany in the quarter-finals of their competition, where they will look to maintain their fine head-to-head record in the fixture.

The final last 16 tie saw Iceland claim a surprise victory against an insipid England team, who despite taking an early lead, largely came up short in the final third of the pitch.

Their captain Wayne Rooney had given them the lead from the penalty spot after just three minutes, when Raheem Sterling was fouled in the box.

Iceland, who had defied lowly expectations by making the knock-out phase of the tournament, struck back instantly after a low throw was headed towards the untracked Ragnar Sigurdsson, who turned home from close range.

The strike shell-shocked England, with Iceland taking full advantage by scoring with their next attack as Kolbeinn Sigthorsson’s weak shot squirmed beyond Joe Hart, with the goalkeeper badly at fault.

England proved unable to muster a response throughout the remainder of the game, with a well-struck Harry Kane volley the closest they came to an equaliser, while Iceland threatened on several occasions on the break.

The lowest ranked nation at the tournament will now face hosts France in the quarter-finals, while an embarrassed England saw their manager Roy Hodgson resign moments after the final whistle.