* Prandelli hands in resignation after Italy defeat
* Match overshadowed by controversy (Adds quotes, details)
By Michael Kahn
"At the end of the match I spoke to the president of the federation, I have told them I am going to resign from my position," he told reporters.
"When there is failure, the person in charge must take responsibility," added Prandelli, who only extended his contract last month.
Federation president Giancarlo Abete, who also declared he was resigning, said he hoped to persuade Prandelli to change his mind.
Prandelli took over from Marcello Lippi as coach in 2010, after Italy were also knocked out in the first round in South Africa as defending champions.
Italy, four-times World Cup winners, leave Brazil after scoring just two goals in three matches - their lowest tally since 1966 when they were eliminated by North Korea in a national humiliation.
The Italy players and coach blasted Mexican match referee Marco Rodriguez after the final Group D game was overshadowed by a biting controversy involving Uruguayan striker Luis Suarez after Italy's Claudio Marchisio was sent off in the 59th minute.
Giorgio Chiellini, who said he had been bitten, accused the official of bias for his failure to punish the Uruguayan.
"Now people will talk of elimination, of failure, but the match was dictated by the referee," he said. "There was an incredible disparity of judgement.
"The referee should have whistled and shown a red, because he was also simulating. He touched his teeth afterwards? Of course...we are not happy, we were the only ones who deserved to go through."
Prandelli said the referee had 'ruined the game'.
"It's ridiculous to be down to 10 men in a game like this. There weren't any bad fouls or anything that merited a sending- off," he said. "You can't affect a game like that."
Italy were sent packing after defender Diego Godin scored a dramatic winner nine minutes from time to put Uruguay into the last 16.
Despite the controversy, Italy goalkeeper Gianluigi Buffon, the man of the match, said Italy must also shoulder the blame for their early departure.
"I could have done without winning man of the match because for me as a player and for the team it is a very sad day," Buffon told reporters.
"It is a day of failure of the level of football we have played. This is something that saddens us a great deal and forces us to reflect a great deal and examine our conscience." (Writing by Alan Baldwin, editing by Ed Osmond)
- Sports & Recreation