The home side also felt aggrieved at being denied a penalty when Gianluca Zambrotta appeared to handle in the box after Luca Toni had given the Azzurri an early lead.
The Scots hit back anyway through skipper Barry Ferguson before being dealt a cruel sucker punch with seconds to go.
A draw would have meant relying on Ukraine defeating France next week or the less likely scenario of the Faroe Islands taking maximum points from Italy in the final round of matches for Scotland to defy all the odds to book their place at next summer's finals after all.
But Everton attacker James McFadden slammed the free-kick decision and blamed referee Manuel Enrique Mejuto Gonzalez.
He said: "After all the hard work we've been absolutely robbed by the referee.
"I think he was shocking. Coming from the Ukraine game, people didn't want us to qualify and they've got what they wanted."
The Everton striker thought Scotland would at least draw the game, after pulling themselves level against the fading Italians.
"They crumbled and it was up to us to kick on and I thought we did," McFadden said.
"I had a great chance and it could have been different if I put that away."
He added: "I'm bitterly disappointed. We think we deserve to be at a major championships."
Lee McCulloch was another Scot in no doubt as to who was to blame for the defeat.
He said: "The referee has done us in the end when he gave them a foul for nothing.
"It is the worst decision I've seen, it has cost us the best prize in football, getting to the finals of a championship.
"Their player got a free header which is our fault but the free-kick should never have been given.
"Nobody can get their head round it. The dressing room is gutted.
"The boys are speechless, they don't know what to say.
"If we had come away with a 1-1 then we would have still had a chance but for the referee to do that was ridiculous.
"There was a foul before that on Gary Naysmith that wasn't given. You want your referees to be consistent so it is very hard to take.
"The linesman was only five yards away - I think his eyes were painted on.
"We still had a chance with a 1-1 which is a big difference from walking away with your head down.
"The referee gave them an awful lot. He was a Spanish referee which suited their football more than ours and you have seen that with some of the tackles, he was giving them needless fouls.
"I heard they had changed the referee to the Spanish and he gave us no favours."