Australia slumped to a last-gasp loss to the Group C underdogs in Valenciennes on Sunday, with Barbara Bonansea's brace ensuring the first big shock of the tournament.

Sam Kerr's debut World Cup goal had the Matildas ahead, but despite dominating the game they were unable to take the three points.

Instead, Bonansea pounced on Matildas defender Clare Polkinghorne's blunder to equalise just before the hour mark, and with a minute remaining she leapt highest to head in the winner and break Australian hearts.

Kerr took off her armband in despair on the full-time whistle as the Italian bench exploded onto the pitch.

Italy's triumph wasn't merited by the statistics; they were starved of possession and took just five shots to Australia's 17.

But after being denied two equalisers to marginal offside calls before laying a late sucker punch, Italy's victory - on their return to the World Cup after a 20-year absence - was certainly special.

"I don't think we deserved that," Australia coach Ante Milicic said.

"We created enough chances to win the game, we dominated enough possession but I think at the crucial times we didn't capitalise on that.

"At times we gave the ball away too easily.

"When we played our football we looked decent, but it was only in patches. We need to quickly regroup and focus on the Brazil game."

The loss isn't terminal for the Matildas' hopes of progressing in France, but they now need a result in their next match with Brazil in four days time.

"We have decided to go the long way about it, the hard way about it," Milicic said.

"You know what? Maybe that's just the Australian way. So we will stare it straight in the eyes and we will go for it."

Australia, seeded for the first time at the World Cup, were favourites at the Stade du Hainaut but a ninth-minute blunder turned out to a harbinger.

Bonansea broke free of the high defensive line, poking the ball between goalkeeper Lydia Williams' legs and into the net, only to be deemed offside after a long review.

That shocked Australia into action.

Livewire fullback Ellie Carpenter, Australia's best, provided a cross for the breakthrough.

Her curling cross was bound for Kerr, who found herself wrapped in a bear hug from Italy skipper Sara Gama with the referee pointing to the penalty spot in the 22nd minute.

Handed a chance to break her World Cup duck, Kerr's initial effort was saved by Laura Giuliani, but she tapped in the rebound to spark Australia's attack.

Then came Polkinghorne's 56th-minute blunder, which allowed Italy to equalise.

The centre back's heavy touch was scooped by Bonansea, who wrong-footed Alanna Kennedy, before smashing a right-footed strike between Emily van Egmond and Walker into the bottom right corner of the net.

Substitute Daniela Sabatino put the ball in the net but again, but was ruled offside.

Italy kept the pressure on and could not be held back in injury time, securing a result to send the blue-clad fans among 15,380 in attendance into raptures.