Stuart Lancaster insists England's World Cup dream is not yet dead despite their devastating defeat to Wales at Twickenham.
England led 16-9 at half-time and then stretched the advantage to 10 points in the second half, but a late try from Gareth Davies and a Dan Biggar penalty six minutes from time sealed a stunning 28-25 victory for Wales.
The result puts Wales firmly in charge of Pool A, while realistically England must now beat Australia next Saturday to avoid a nightmare exit before the quarter-finals.
"There's no doubt it's knock-out rugby," Lancaster said. "Wales have to go and play Fiji and have still got to play Australia but yes, arguably Australia is the knock-out stage for us now.
"Two teams go through from the pool and teams in the past have lost in the pool and gone through to the final. I said to the boys in the changing room, everything has to now go into beating Australia."
The defeat comes as a crushing blow to England, who dominated large spells of the contest but were simply unable to finish their opponents off.
Jonny May's first-half try had put the hosts in the driving seat but indiscipline at the breakdown continually allowed Wales to stay in touch.
Owen Farrell, a surprise selection at fly-half ahead of George Ford, kicked 20 points during the match but England chose not to kick a late penalty after Wales had taken the lead.
The three points could have sealed a valuable, draw but captain Chris Robshaw instead opted for a line-out in the hope of scoring a match-winning try.
"That call comes down to myself," Robshaw said. "We spoke to the kickers on the pitch and we decided we wanted to go for the win.
"The two line-outs before we had good ascendancy in the driving but unfortunately it didn't come off there.
"It was a tough kick, we weighed up the options, we wanted to go for the win. It didn't work and now it's about the character of the squad. It hurts like hell at the moment."
On the decision to go for a line-out, Lancaster added: "It was a big call. If you go there you have to nail it and we didn't.
"I know the boys are gutted but collectively it's more frustrating the number of penalties we gave away that allowed them to stay in the game.
"We talked a lot about the breakdown. (Referee) Jerome Garces is very tight on that and that ultimately was the difference."
England's Ben Youngs, Courtney Lawes and Billy Vunipola all went off injured and will be assessed on Monday, but Wales also suffered damage to key players.
Scott Williams (knee) and Liam Williams (head) departed on stretchers in the second half while Hallam Amos also left the field with a shoulder injury.
Wales, however, dug deep and the win means they now lead England by three points at the top of Pool A.
"Today was about courage," Gatland said. "This game is about emotion. If you want it badly enough, for whatever reason, it can happen for you. You just have to dig deep.
"As a coach the way these players stuck at the task and took the points - I can't ask for any more. I think we wanted it more in the end."
Gatland was also surprised England chose not to kick their late penalty.
"I thought they would have gone for goal and gone for the draw," he said. "It was a brave call to make. We did a good job stopping the driven maul and pushed them into touch.
"Those are the decisions you make sometimes. You get a line-out and you win the game, you're a hero, you make the wrong call and you're zero. It's one of those things.
"If you ask me, I would have taken the three points."
Wales captain Sam Warburton paid tribute to his team-mates' determination after the epic win.
"Unbelievable," he said. "I'm gutted [because] we've lost Jon Davies, Rhys Webb, Leigh Halfpenny, Cory Allen, and a couple of others go off then and hopefully they're okay.
"But it just shows the sort of spirit and the strength of the squad that despite the fact we've lost those sorts of top quality players, we can still come to a place like Twickenham, one of the hardest places in the world, and get an away victory.
"Credit to England, they threw absolutely everything at us, they played really well and we really had to be at our best in defence, we gave a few too many penalties away but I'm lost for words, amazing win."
Despite trailing by 10 points at one stage, Warburton never gave up hope they would be able to pull off an unlikely win.
"I think we've been in that situation a few times at half-time, we might not be leading the game but we've backed the fitness work we've done in the summer and know in the last 20 minutes we can come through quite strong," he said.
"We always said, 'Keep our composure, no matter what the circumstance', and I'm glad that under a bit of pressure there, we managed to see the game out."
