Brazil secured their place at the 2010 World Cup with an impressive 3-1 win over arch-rivals Argentina while South America's other candidates jockeyed for the region's other three automatic berths.
The defeat left Diego Maradona's side contemplating the dreaded prospect of missing out on the finals but Argentina did cling on to the fourth and final qualifying place after Colombia beat Ecuador 2-0 in another of yesterday's five-match programme.
Chile and Paraguay (27) are both three points behind Brazil (30) and on the verge of sealing spots in South Africa with three matches remaining in the marathon 18-game qualifying round.
A Rodrigo Millar equaliser saved the Chileans, who were surprisingly held 2-2 at home by Venezuela, with their Argentine coach Marcelo Bielsa saying: "Those were two points lost."
Paraguay beat Bolivia at home with a Salvador Cabanas penalty and their Argentine coach Gerardo Martino said: "There's no doubt this was the match to win... Everything we manage to add from now on will surely mean we achieve our goal."
Bottom side Peru ended a run of six consecutive losses with a surprise 1-0 home win over Uruguay thanks to Hernan Rengifo's late strike, compromising the visitors' chances of at least making fifth place and going into a playoff.
TIGHT FIGHT
The fight is well and truly on for fourth place after Argentina's defeat, only their second ever at home in a World Cup qualifier after their 5-0 rout by Colombia on exactly the same day 16 years ago.
That defeat forced Argentina out of the automatic qualifying berths and into a two-leg playoff against Australia, which they won after recalling Maradona, to reach the 1994 finals in the US.
Maradona's return late last year as coach has not met with the desired results, however, and defeat against Paraguay in Asuncion on Wednesday could leave Argentina once again faced with the prospect of a playoff.
This time around it would be against the fourth-placed team in the CONCACAF region, a position occupied by Costa Rica.
"The Argentina players have quality and are used to playing finals," a diplomatic Dunga said of Maradona's team, anticipating a good result for them against Paraguay.
However, despite his own team's qualification, Dunga rued the loss through suspension of playmaker Kaka and two-goal Luis Fabiano in their home match against Chile on Wednesday.
Maradona, evidently sure of his place at the helm despite media cries for his head, showed no emotion after the crushing defeat amid chants late on of Dunga's name from home fans.
It was Argentina third loss in five qualifiers under former World Cup-winning captain Maradona, who said that looking for a victory in Asuncion "will be hard, complicated".
Ecuador, who have been to the last two World Cups, fell to two late goals in Colombia in a tight fight for fourth and fifth place with only four points separating five teams. Argentina have 22 points, Colombia and Ecuador 20 and Uruguay and Venezuela 18.
Colombia, who last reached the finals in 1998, came out best from that five-way contest with their win over Ecuador, who were down to 10 men from the 48th minute following a red card for Pablo Palacios.
Substitute Jackson Martinez and Teofilo Gutierrez scored in the final nine minutes for Colombia, whose tally of nine in 15 matches is the lowest of the 10-team group.