A below-strength England Under-21 side were beaten by Iceland in Preston on Monday as they continued their build-up to June's European Championships.
Stuart Pearce's side were looking for another confidence boost after thrashing Denmark 4-0 last Thursday and they took the lead 13 minutes in through Nathan Delfouneso.
But Arnor Smarason equalised three minutes before half-time and West Ham's Holmar Orn Eyjolfsson headed the winner in the 67th minute at Deepdale.
Pearce handed full debuts to Aston Villa defender Nathan Baker and 17-year-old Ipswich striker Connor Wickham while Chelsea midfielder Josh McEachran, so impressive on his previous start against Italy, was given another chance.
Only Alex McCarthy, Kyle Naughton and Ryan Bertrand kept their places from Thursday's trip to Denmark, with Pearce giving some of his fringe players a chance to stake their claim in England's penultimate friendly ahead of this summer's tournament.
The hosts dominated the early stages but it was Iceland, drawn in the opposite group to England in Denmark, who managed the first decent effort on goal when Alfred Finnbogason's 13th-minute shot was parried by McCarthy.
The keeper then collected Bjorn Sigurdarson's follow-up cross, and his distribution was the catalyst for England to take the lead as Danny Rose's pinpoint through ball was coolly dispatched into the bottom corner by Delfouneso.
Pearce's side looked in total control and it seemed only a matter of when they would add to their lead, with the impressive Marc Albrighton causing havoc down the right. In the 38th minute, a cross from the Villa man was volleyed wide of the near post by McEachran, but four minutes later Iceland levelled with a near replica of England's goal.
Jack Cork was dispossessed by Finnbogason 35 yards out and his pass picked out Smarason, who slotted the ball first time past McCarthy.
Pearce made two changes at half-time, with Scott Loach and Tom Cleverley coming on for McCarthy and Cork, and Cleverley quickly made an impact, crossing for Baker to power a header over the bar.
Wickham, who had offered only fleeting glimpses of his talent, then lashed a volley at Iceland keeper Haraldur Bjornasson from a tight angle as England sought to restore their lead.
The hosts had a narrow escape in the 67th minute, though, when a sloppy touch from Tomkins played in Finnbogason but, after Loach failed to hold onto his shot, the West Ham defender made up for his error by blocking the follow-up from Sigurdarson.
However, it was only a temporary reprieve as, from the resulting corner, Smarason crossed for Eyjolfsson to flick a header just inside the far post. The scoreline was harsh on England, who were being made to pay dearly for their mistakes.
Pearce responded by giving debuts to Adam Hammill and Jordan Spence, while he also brought on Joe Bennett in a triple substitution. Iceland continued to threaten on the break, though, and Loach had to be alert to deny Sigurdarson with a good block.
Pearce sent on Jordon Mutch for his debut and Scott Sinclair with seven minutes left. Sinclair almost made the difference, first firing past the post and then seeing his shot superbly kept out by Bjornasson, but there was to be no late twist for the 14,622 fans to cheer.
After the game, Pearce stressed that he must be allowed to take the best available players to the European Championship in the summer.
That would mean the likes of Arsenal midfielder Jack Wilshere and Liverpool striker Andy Carroll, who are both now regulars in the senior side, being part of the squad for the tournament in Denmark in June.
Pearce's stance is likely to be unpopular with the players' clubs, although he has confirmed he will not consider Wilshere's Arsenal club-mate Theo Walcott, who was included in the party for the same tournament two years ago.
Pearce said: "Jack's been in this squad, he helped the squad qualify for the finals, and I know how good he is. The same with Andy Carroll, who's played three or four matches at this level.
"We would look slightly amateurish maybe if we decide to leave our best players at home because we generate this myth that we play more football than anybody else and all of a sudden maybe Spain turn up in our group and they might have a World Cup winner in their ranks. That would look rather silly I think.''
Monday's result was a step back for England after their impressive 4-0 win over Denmark in another friendly last Thursday, although the side Pearce picked was considerably weaker. He allowed the likes of Chris Smalling, Danny Welbeck and Daniel Sturridge to leave the squad and they were missed.
Pearce, though, insisted the game had been a valuable lesson, saying: "I've got out of these two matches exactly what I wanted to see. I could have maybe fielded the strongest team in two games but then I don't see Marc Albrighton, Josh McEachran, Connor Wickham and so on.
"When I went into the games I needed to see as many players as I possibly could to give myself an idea for the summer, and on top of that I thought it was right and proper that the players that are playing more regularly put their feet up after Thursday evening, for my preparation.
"There's been a little bit talked about doing the clubs favours but my main consideration A is to England, B is for England to win, and C is to the players. The players care and that was what Thursday was all about.''
Explaining his decision not to consider Walcott, Pearce added: "We feel as though he's had enough experience and deem him as a senior player so I won't view him for the tournament this summer.''