In a dramatic final 10 minutes in Toulouse, Michael Owen, the 18-year- old Liverpool striker, scored an equaliser for England which seemed to have rescued a point for coach Glenn Hoddle's team.
However, in a final twist, Dan Petrescu, the Chelsea full-back, smashed the ball through the legs of goalkeeper David Seaman.
England now face Colombia in Lens on Friday in their final group fixture knowing a draw will send England through because of their superior goal difference.
Hoddle said afterwards: "I am very disappointed. The two goals we gave away were schoolboy stuff. The defending was poor."
The defeat was a huge disappointment for millions of television viewers. Ladbrokes reacted by lengthening England's odds to win the tournament from 8-1 to 33-1.
Ironically it was a striker who earns his living in the Premier League, Coventry's Viorel Moldovan, who punctured English optimism with Romania's opening goal two minutes into the second-half.
This was a far tougher test than England had faced in the opening game against Tunisia and hope was disappearing before Owen, a substitute for Teddy Sheringham, struck with seven minutes remaining. Paul Ince hobbled off with an ankle injury before the interval and was replaced by David Beckham.
Fears of an outbreak of violence as witnessed in Marseilles proved unfounded last night as Toulouse remained quiet. Despite two reports of isolated skirmishes among the thousands of fans gathered in the main square, the majority of England supporters stayed calm. The total numbers of English fans at the game was said to be about 25,000.
Meanwhile, four English Category C hooligans expelled from France with a lifetime ban were named last night. Raymond Rafferty, 36, from Coventry, and Stephen Baker, 25, Stephen Fowler, 29, and Terrence Coughlin, 36, all from Birmingham were expelled on Sunday after having been picked up by police spotters. Police sources said the men had convictions related to football violence.
In the Commons, MPs backed an amendment to the Crime and Disorder Bill raising the maximum jail sentence for breach of orders used to ban convicted hooligans from going to matches from one month to six. They also agreed police powers to arrest fans who breach such orders,
Earlier, the German football authorities had considered withdrawing from the World Cup in the wake of the trouble on Sunday when hundreds of the country's hooligans ran riot in the French town of Lens.
The disturbances caused thousands of pounds' worth of damage and left a French policeman in a coma. His condition was said be between "life and death". Some 96 fans, mostly German, were detained .Reuse content