Spain are finally hitting their stride after crushing Portuguese hopes in a 1-0 round of 16 victory, with Paraguay the next target on their World Cup radar.

The European champions have long been fancied as a strong contender to win their first ever World Cup, but an opening defeat against Switzerland dented their prospects.

Coach Vicente Del Bosque blamed the hiccup on anxiety and they bounced back to defeat Chile and Honduras before David Villa put their Iberian arch-rivals Portugal to the sword late on Tuesday.

Playmaker Xavi, who was named man-of-the-match, said it was their best performance so far.

"We were on top of our game," he said.

"Especially in the second half, when we had control of the ball and played our best football. The goal did us a power of good and that's when we started hitting top form. Basically, we enjoyed our football. It was the best match we have played in the World Cup."

Spain had a second-half Villa strike to thank for their victory, with the in-form Barcelona forward grabbing his fourth goal of the tournament, chipping a rebound over goalkeeper Eduardo after his first shot was saved.

"Portugal were very tight at the back and their keeper was in great form," said Villa.

"They didn't make it easy for us, but I got one sight on goal and luckily it was enough."

Next up are Paraguay on Saturday in Johannesburg after the South Americans beat Japan 5-3 in a penalty shoot-out following their 0-0 draw.

If Spain overcome that hurdle then Argentina or Germany await them in the semi-finals, although Del Bosque is only looking ahead one match at a time.

"The match was extremely intense," he said of the Portugal encounter.

"It was quite even in the first half, but we always controlled the game and in the second half we were better than them.

"We had greater depth but it was a difficult game."

He added that it would be a mistake to underestimate a Paraguay team playing in its first-ever World Cup quarter-final.

"We shall not underestimate Paraguay and prepare for them with great respect," he said.

"They have very good defenders but also attackers. We must be fully focused to win that match.

"We know how difficult it is to be victorious, we can't take anything for granted. We must be hugely respectful of our next opponents."

An ongoing worry for Spain is the poor form of Fernando Torres, who was substituted in the 58th minute with the game turning in their favour after his replacement Fernando Llorente came on.

The Liverpool striker, who was a doubt prior to the tournament after being forced to undergo ankle surgery in April, is still to score in South Africa. He looked short of sharpness against Portugal, regularly running down blind alleys and failing to trouble Eduardo.

Del Bosque insisted Torres was still a big part of his plans.

"The substitution was made because Torres had done a lot of running and we needed fresh legs," he explained.