Roy Hodgson found it “tough to accept that we have lost” against Italy and has faith England can still qualify.
The Three Lions capitulated 2-1 in Manaus on Saturday night, as an injury-hit Azzurri side came out on top.
“It's very tough to accept that we have lost,” manager Hodgson told BBC Sport.
“It was undoubtedly the best I have seen the team play, as a team, in my time with them. We hoped for a perfect start but don't live in a perfect world. In the second half, we did everything but score.
“We are not the sort of team to sit back and, unfortunately, it left one or two opportunities for Italy to get the ball in. But the performance gives us great confidence.”
Ex-Inter Coach Hodgson pulled a surprise on Cesare Prandelli and England supporters by fielding Danny Welbeck and Raheem Sterling together.
“I thought Raheem Sterling was very dangerous throughout the game. Danny Welbeck had some good moments and Steven Gerrard and Jordan Henderson did everything expected of them.
“I thought Wayne Rooney did very well. We know he can play in different positions and he can be satisfied with his performance.”
England now face Uruguay on Thursday, as both teams are bottom of Group D whereas Italy and Costa Rica have three points each.