Charlotte Edwards blamed a slipshod bowling and fielding display for the shock defeat by Sri Lanka in Mumbai that has left England, the holders, in danger of crashing out of the World Cup at the group stage. But England's veteran captain refused to panic.

"We'll pick ourselves up," said Edwards after her team, significantly below strength because of injuries to Sarah Taylor and Laura Marsh, lost by one wicket to a six off the last ball. "We've got a big game against India. It's not all over. There's no panic and we've got to dust ourselves down and come back on Sunday."

England will almost certainly need to win their two remaining group games, against India and West Indies on Tuesday, to reach the Super Sixes.

"We're obviously disappointed, but what a game of cricket," Edwards said. "Congratulations to Sri Lanka – they played a fantastic game and we just weren't good enough. We were happy with 238 from the position we were in and it was just the big hitting there at the end, a few catches dropped and a few misfields which really cost us.

"You can't take away from what a great effort that was from Sri Lanka. I thought they bowled fantastically up front and that hitting there towards the end was something else."

Sri Lanka's captain, Shashikala Siriwardene, described the win as the finest in her team's history. "It's like a dream come true for us. We've been waiting for this moment for 16 years," she said.

Having lost two of their key players to "slight injuries" before the game, Edwards then lost the toss, and the captain fell cheaply as the morning conditions helped the Sri Lanka bowlers, with England slipping to 29 for three.

Their total of 238 therefore represented a decent recovery, thanks largely to a half‑century from Jenny Gunn and some tidy contributions from Arran Brindle and Taylor's wicketkeeping replacement, Amy Jones.

Sri Lanka responded with an opening stand of 102, with Chamari Atapattu going on to make 62. But England exploited Sri Lanka's nerves as they moved closer to a famous win, with Katherine Brunt taking two important wickets and Eshani Kaushalya run out off the fourth ball of the last over with the scores level.

She had hit 56 from 41 balls, punishing some slipshod bowling and fielding. Despite England's best efforts Georgia Elwiss, who was bowling the last over, was unable to secure an unmerited tie.

From a broader perspective, the result is a major boost to the tournament and to women's cricket as a whole, suggesting greater competitive depth. But from England's point of view, it is a nightmare. Following on from the defeat they suffered against Australia in the final of the World Twenty20 in Sri Lanka last September, it may also lead to questions about performance being asked by the England and Wales Cricket Board, which invests far more heavily in women's cricket than most of its rivals.