City were bundled out on penalties and Hughes said: "We got into a situation where we should have seen the game out quite comfortably. Certainly in the second half I felt we were controlling it well, but we switched off at the end.
"Unfortunately in extra time we switched off again and allowed them to take the lead. We showed character to get level and get to penalties, but we should have never allowed it to get to that stage with the chances we had in the second half, when we should have put the game to bed."
The starting line up at the Withdean Stadium showed several changes from the one that began City's win over Portsmouth, but Hughes felt that the team picked was more than good enough to close the tie out.
"The team I put out was strong enough. I made six changes but quality players came in, maybe it showed that some of the guys are not up to match fitness. Some have not had a lot of football, and that will affect the tempo you will play at.
"Credit to Brighton, they ran every ball down. Once it went to penalties it's a lottery that could have gone either way. Unfortunately we missed out, we move on but good luck to Brighton.
"Tonight was not a great night, but we cannot dwell on that as we have games coming up thick and fast. We have to pick ourselves up quickly."