Iceland, a tiny island country of barely 330,000 people that was expected to struggle in France, took the lead through Jon Dadi Bodvarsson in the 18th minute at Stade de France.
But Iceland would seal the points in second-half stoppage time – a stretching Traustason steering home Teddy Bjarnason’s from a last-gasp counter to secure the historic victory.
The victory has seen Iceland finish second in the group behind Hungary, while Portugal will advance as one of the four best third-place teams.
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Australia had their chance to draw level in the 36th minute as David Alaba was pulled down in the penalty area but Aleksandar DragoviA squandered the fine opportunity by dragging his spot-kick wide off target.
Goalkeeper Hannes Halldorsson came to Iceland’s rescues in the 72nd minute, getting down low to stop another Schopf shot that looked destined for the back of the net.
While having a man sent off in their surprise opening defeat against Hungary certainly did not do their cause much good, a blunt attacking performance against Portugal next time out saw them rather fortunate to come away with a point. Around the 60th minute mark Alaba found Schopf with a crisp pass.
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