Liverpool were made to pay for their first-half misses

The Merseysiders had early chances to overturn their 1-0 first-leg deficit, with Peter Crouch, Jamie Carragher and Luis Garcia the most guilty.

They were made to pay when Carragher dithered and ex-Reds target Sabrosa Simao produced a stunning strike.

Fabrizio Miccoli completed Liverpool's misery when he grabbed a second in the dying minutes with an overhead kick.

It was always likely to be a tough task after their failure to score in Portugal.

And it was made even harder when John Arne Riise and Sami Hyypia were ruled out through injury.

But Liverpool started brightly with Rafael Benitez's decision to opt for the combination of Fernando Morientes and Peter Crouch up front paying dividends.

The pair's aerial dominance helped the Reds to regularly carve a fragile Benfica backline apart.

After 10 minutes Crouch's shot took a deflection off Cleber Beraldo Anderson on to the outside of the post with Benfica keeper Marcelo Moretto well beaten.

From the corner Garcia's volley was cleared off the line and Carragher produced a defender's finish in firing the rebound into the side netting from just a few yards out.

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With goals needed Liverpool seemed determined to cast aside their usual cautious approach, with Steve Finnan bursting into box but with the goal at his mercy Anderson charged his shot down.

Garcia wasted another chance when he took a long, diagonal ball on his chest before exchanging passes with Morientes.

But with just the keeper to beat he blazed his shot wildly over the bar.

Minutes later Steven Gerrard drove into the box and slipped a perfect pass for Crouch but, after taking a good first touch, he produced a poor finish straight at the keeper.

There was a huge let-off on the half-hour when Geovanni controlled a difficult ball on his chest before firing in a first-time effort that beat Jose Reina but came back into play off the bar only for Simao to shoot at Reina.

Crouch had a decent shout for a penalty after being body checked, but the referee instead opted to book him for diving.

Benfica celebrate at Anfield

Liverpool had survived some nervous moments at the back, with both Finnan and Djimi Traore almost being caught out.

And it proved to be third time unlucky when Carragher failed to clear and it eventually fell to Simao who faked to shoot before unleashing an unstoppable drive into the top corner.

Liverpool were almost given a helping hand when Beto almost sliced the ball into the top corner from a bizarre attempt at a clearance.

Carragher came close to making some amends for his earlier error with a header that hit the outside of the post.

But Liverpool were unable to get a goal back before the break so they found themselves in the same situation as last season's final: needing three second-half goals.

Xabi Alonso almost got one back with a wonderfully struck shot only for Moretto to produce a fine save.

The chances continued to come with Carragher heading over, but even the introduction of Robbie Fowler failed to inspire them to another famous European victory.

With Liverpool piling forward Benfica broke and Miccoli, who was left completely unmarked in the box, scissor-kicked Liverpool out of the Champions League at the second attempt.

Liverpool: Reina, Finnan, Carragher, Traore, Warnock (Hamann 70), Luis Garcia, Gerrard, Alonso, Kewell (Cisse 63), Morientes (Fowler 70), Crouch.
Subs Not Used: Dudek, Hyypia, Anderson, Barragan.

Booked: Crouch, Alonso, Gerrard.

Benfica: Moretto, Alcides, Luisao, Anderson, Leo, Robert (Ricardo Rocha 70), Beto, Manuel, Geovanni (Karagounis 60), Simao, Nuno Gomes (Miccoli 76).
Subs Not Used: Quim, Karyaka, Marcel, Nelson.

Booked: Robert, Nuno Gomes.

Goals: Simao 36, Miccoli 89.

Att: 42,745.

Ref: Massimo De Santis (Italy).