Paraguay took a shock lead from a set piece on 39 minutes after Aureliano Torres fired a wonderful delivery into the Italian penalty area.
Wigan AthleticÃ¢â‚¬â„¢s AntolÃƒÂn Alcaraz rose highest, towering over the experienced Fabio Cannavaro and Daniele De Rossi, and powering a header past Gianluigi Buffon.
Italy, widely written off as contenders at this World Cup, looked stupefied. For a country which successfully adopted the infamous catenaccio, the soft manner in which the goal was conceded perhaps highlighted the weaknesses in this Italian side.
But Marcello LippiÃ¢â‚¬â„¢s team emerged forÃ‚Â the second half seizing the initiative.
The defending champions dominated proceedings, enjoying the majority of possession but lacking the final decisive pass and the ruthless edge up front.
Nevertheless the Italians were gifted an equaliser midway through the second half.
ItalyÃ¢â‚¬â„¢s Pepe fired in an average-looking delivery from a corner which appeared a simple take for Justo Villar. Bizarrely, however, the Paraguayan keeper decided to lurch forward and attempt to punch, perhaps attracted to the ball by the darting run of Alberto Gilardino.
The flight of the ball deceived Villar and floated over the helpless keeper with Daniele De Rossi on hand to tap home.
Villar redeemed himself somewhat when he made two sharp saves from Claudio Marchiso and Riccardo Montolivo.
In the post match conference, Marcello Lippi talked up ItalyÃ¢â‚¬â„¢s performance insisting the Azzurri merited a victory.
Ã¢â‚¬Å“We played a good game. The only thing we missed were the three points,Ã¢â‚¬Â Lippi told Gazetta della Sport.
Ã¢â‚¬Å“Italy had the head, legs and the heart if anyone had any doubt,Ã¢â‚¬Â added Lippi. Ã¢â‚¬Å“I am very satisfied of the approach, mentality and quality of our play.Ã¢â‚¬Â
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