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Neville spot on for Everton

Chelsea 1 Everton 1 <i>(aet; Everton win 4-3 on penalties)</i>

It is a good thing Chelsea are still in the Champions' League, because if they were not, then Carlo Ancelotti's hint yesterday that he might not stay in the job after the summer would have seemed a rather optimistic bit of forecasting.

With this exit from the FA Cup, and with the Blues out of contention for the Premier League, let alone their fight to qualify for the Champions' League next season, Roman Abramovich might have decided to call time on the Italian's 20-month tenure before spring has truly sprung.

Ancelotti saw his side take the lead in extra time and in the penalty shoot-out, but the club still suffered their first defeat in the Cup in three years, thanks to Leighton Baines's brilliant free-kick in the penultimate minute of extra time and Phil Neville's decisive effort in the shoot-out.

But Ancelotti always has FC Copenhagen. The Danes are their opponents in the first leg of the last 16 in Europe on Tuesday and progress is imperative for many reasons, not least Ancelotti's job security.

Chelsea met David Moyes's men on the rebound from their 2-0 defeat to Bolton Wanderers last weekend. The Scot, who will now prepare for a home fifth round tie against Reading, said: "You have to prod people now and again and they responded. They were top notch. We've always been high energy and committed although it didn't look that last week and we were at Chelsea from the off."

Added to that, Chelsea are back in a mini-slump. After their home League defeat by Liverpool they only scraped a draw at Fulham on Monday, failing to score in either game.

Yet Frank Lampard's goal here was scant reward for dominating the two hours. Time and again the midfielder went close, as did Florent Malouda and even John Terry, while Phil Jagielka headed on to his own post. Didier Drogba, in for the ineligible Fernando Torres, always posed a threat.

And then there was the penalty that should have been. At the end of the first half of normal time Ramires was set free into the penalty area and Tim Howard raced out. The Brazilian went to ground as the two had a minor collision, but the referee, Phil Dowd, booked the midfielder for simulation. Ancelotti, and virtually everyone inside the ground, thought it was a penalty but Dowd decided he had seen a dive. From this perspective, there was enough contact to warrant a penalty.

That decision should have been redundant as Chelsea continued to test Howard and his well-organised defence. Howard's best save came after 65 minutes, when Malouda teed up Lampard whose effort was smothered. From the ensuing corner, Branislav Ivanovic's header was cleared off the line.

Nothing much changed in extra-time, beyond Lampard finally getting the reward for 104 minutes of persistence. Drogba touched down Nicolas Anelka's cross, and Lampard was free, eight yards out.

In the Cup final two years ago, Everton took the lead against Chelsea before losing. This time the pattern was reversed. Baines stepped up with a minute of extra time remaining, after Ivanovic had fouled Jagielka 22 yards out. When the left-back's effort was in mid-air it was already clear it was going to beat Petr Cech.

Cue delirium, cue penalties. Baines had his effort saved but so did Anelkawhile Ashley Cole fired over, leaving Neville to wrap things up.

"We are disappointed," said Ancelotti. "We worked hard for two hours, we created a lot of chances, we deserved to win."

Moyes was happy to take the creditfor putting Neville, not most people's choice for penalty taker, at the end of the shoot-out. He said: "I had a feeling he should go last. His experience, his nous, I thought he could handle the situation." He was right.

Attendance: 41,113

Referee: Phil Dowd

Man of the match: Baines