So much for the demise of Italian football. While half of Europe wondered about the alleged decline of the Italian game following the mass exit of their sides from both competitions in the past fortnight, the other half gloated. Last night at Stamford Bridge, though, Italy hit back.

In inflicting upon Chelsea their first ever home defeat in 33 years of European competition, Lazio not only won Group D, but did so with the kind of attacking display that will have plenty of punters searching for their odds on winning the tournament outright this morning.

They did so in demanding circumstances, coming from behind after Gustavo Poyet put Chelsea ahead with a dramatic 45th minute goal, and then losing Fernando Couto seven minutes from the end for a second yellow card. Couto deserved to walk, the surprise being that he did not do so earlier in an abrasive contest.

But by then Lazio had been in front and in comfortable control for 17 minutes. After Simone Inzaghi had levelled the scores nine minutes after the break, the beautiful left foot of Sinisa Mihailovic speared a brilliant direct free-kick into the top corner 12 minutes later.

Chelsea, playing without an Englishman in their team, were at once beaten.

Dan Petrescu had a late, late shot cleared off the line, but now Chelsea sweat on whether they draw Manchester United, Barcelona or Bayern Munich in the quarter-finals. Whoever Chelsea meet, it will be without Frank Lebouef, suspended after receiving a third yellow card.

An ill-tempered evening had its pattern set quickly in a series of niggly challenges involving two sets of feisty midfielders. Chelsea may have lacked Dennis Wise's spikiness in that department - Wise, who had an injury scare on in training on Tuesday, was rested by Gianluca Vialli, who admitted after that Wise's "leadership" was badly missed - but Roberto Di Matteo more than compensated with a clattering early tackle on Diego Simeone which left the Chelsea man in the referee's book.

It was to be the first of three first-half bookings, yet the Portuguese referee could have quadrupled that number. But he chose to be lenient and that contributed to the steadily increasing tension. Certain players appeared determined to literally stamp their presence on the occasion.

In between the spite an entertaining match broke out. Most of this was down to the visitors. Their need was greater, of course, but Chelsea were indebted to Ed de Goey for some effective, if not completely convincing, goal-keeping.

In just the third minute a breakaway by the impressive Pavel Nedved climaxed with a tempting cross that Inzaghi volleyed straight at De Goey; that warning was followed swiftly by another from Juan Veron. The Lazio playmaker collected the ball 40 yards from goal, advanced a stride and lashed a vicious drive which bounced unhelpfully if front of De Goey. The big Dutchman did well to palm it away.

Nedved then had a useful shot and in the 16th minute Dejan Stankovic flashed an unmarked header inches over the Chelsea crossbar. Lazio were pumping. Before the half hour De Goey was again called on, this time by Mihailovic's first expert free-kick of the night. Lebouef was brave to block Inzaghi's follow-up.

Chelsea, meanwhile, could offer only a tame Gianfranco Zola volley and a weak header from Poyet. Even before Poyet's thrilling opener Inzaghi had a glorious chance to head Lazio in front - more good work by Nedved.

But then, with half-time beckoning, Didier Deschamps won a significant midfield collision, the loose ball running to Poyet. Sizing up his options, Poyet thrust forward in now trademark predatory fashion and sent a swerving 25-yard drive beyond the dive of Luca Marchegiani.

Given the timing and injustice of the goal, Lazio must have been sickened. However, with Alen Boksic on for Stankovic, the Italians again dictated the tempo, Boksic profiting from some dallying by Marcel Desailly only to hit the side-netting; Nedved then fired wide disappointingly when well-placed and when the Czech's first touch in the next attack was a poor one it seemed another opportunity had been squandered.

But Nedved recovered, slid in a dangerous cross and Inzaghi nipped in before Desailly despite the Frenchman's physical and positional advantage. If the equaliser was thoroughly deserved, so was the winner 12 minutes later, Mihailovic's arrowed strike rushing past De Goey from an unpromising angle.

That is how Italian football has been viewed lately. But Lazio fly the flag, the one Italian team in the quarter-finals of two competitions. No one will relish meeting them.

Chelsea: De Goey, Ferrer, Desailly, Leboeuf (Hogh 61), Babayaro (Harley 73), Petrescu, Di Matteo (Morris 73), Deschamps, Poyet, Flo, Zola. Subs Not Used: Cudicini, Sutton, Ambrosetti, Thome. Booked: Di Matteo, Leboeuf, Flo. Goals: Poyet 44.

Lazio: Marchegiani, Negro, Couto, Mihajlovic, Pancaro, Stankovic (Boksic 46), Veron, Simeone, Almeyda, Nedved, Inzaghi (Salas 67), Salas (Gottardi 87). Subs Not Used: Ballotta, Sensini, Conceicao, Mancini. Sent Off: Couto (83). Booked: Couto, Pancaro, Salas. Goals: Inzaghi 54, Mihajlovic 66.

Referee: V Melo Pereira (Portugal).