Japan's defending champions Urawa Red Diamonds tumbled out of the Asian Champions League in the group stage on Wednesday after losing 2-1 to Hanoi FC in their final game.

The three-time champions needed to win to stand any chance of progressing but they fell behind early in the second half to already eliminated Hanoi in Vietnam.

Bryan Linssen equalised in the 65th minute but Pham Tuan Hai slotted the winner from the penalty spot three minutes from time to bundle the Japanese side out of the tournament.

The result leaves Urawa, who beat Saudi Arabia's Al Hilal in May to win last season's title, with no chance of playing in continental competition next term.

They missed out on qualification through the domestic J-League on Sunday when Sanfrecce Hiroshima pipped them to third place with a 96th-minute goal on the final day.

"It's a very difficult result to accept -- we needed to win tonight if we wanted to repeat as champions," said Urawa goalkeeper Shusaku Nishikawa.

"We wanted to win and it's frustrating that we couldn't do that for the fans who came here to support us."

Even a win might not have been good enough for Urawa, who went into the game guaranteed to finish second in their group behind South Korea's Pohang Steelers.

They looked to be on their way when they were awarded a penalty in the 10th minute for a handball by Hanoi's Dao Van Nam.

But goalkeeper Nguyen Van Hoang dived to his left to deny Danish defender Alexander Scholz with a brilliant stop.

Dao atoned for his mistake by heading Hanoi into the lead from close range after a corner in the 53rd minute.

Dutch striker Linssen turned home Takuya Ogiwara's cross for the equaliser but Ogiwara then tugged down Nguyen Hai Long to give Hanoi a penalty that Pham slammed home.

"I wasn't able to help the team out by saving that late penalty and that's something for me to reflect on," said Nishikawa.

Pohang drew 1-1 with China's Wuhan Three Towns in the day's only other game.