ROY Hodgson has stepped down following England's shock Euro 2016 exit to Iceland, with the Football Association backing the outgoing manager's decision and pledging to discuss the next steps imminently.

Having arrived in France among the favourites following a 100 per cent qualifying record, falling at the last-16 hurdle to Iceland ranks alongside the 1950 World Cup exit to the United States in the embarrassment stakes.

Wayne Rooney's fourth-minute penalty proved to be a false dawn as Ragnar Sigurdsson and Kolbeinn Sigthorsson capitalised on errors to secure the smallest nation to ever grace a major tournament a well-deserved 2-1 victory in Nice.

Iceland's historic win led to Hodgson to announce his resignation 20 minutes after the final whistle, the 68-year-old reading a statement at the post-match press conference.

"I'm extremely disappointed, of course, about tonight's result and ultimately our exit from the competition," he said while sitting alongside coaches Ray Lewington and Gary Neville, who are also departing.

"We haven't progressed as far as I thought we were capable of, and that's obviously not acceptable.

"I am actually proud of the work that my coaching staff and I have achieved in our time at the helm with England.

"The transition from a squad whose average was 30 to now being the youngest in the tournament is both remarkable and exciting for the future of English football.

"I would have loved to stay on for another two years, however I am pragmatic and know that we are in the results business.

"My contract was always up after the Euros so now is the time for someone else to oversee the progress of this young, hungry and extremely talented group of players.

"They've been fantastic and they have done everything that has been asked of them.

"When I arrived I was told that players didn't turn up to play for their country or that they pull out at the last minute. But I have not seen any of that.

"These players love to play for their country and their commitment has been unquestioned.

"Ray and Gary have asked me to speak on their behalf. They arrived with me as part of my coaching team and they'll leave with me.

"I'd like to thank them for their dedicated support and for the major part they've played in our team preparation.

"Finally I'd like to thank all the support staff, players, the FA and of course the fans.

"It's been a fantastic journey these four years and it's one I'll look back on or remember with pride.

"Finally I'd like to thank you, the media, for the support that you've given me over the four years.

"I am sorry it's had to end this way with another exit from the tournament but these things happen and all I can do is wish everybody all the very best and hope that you will still be able to see an England team in a final of a major tournament fairly soon.

"We've been unable to deliver. Thank you very much."

Hodgson did not take any questions from reporters, only reading the statement it is believed was composed in the dressing room after the final whistle.

Before coming to speak to the media, Hodgson, Lewington and Neville spoke to the players, as well as telling FA chief executive Martin Glenn and technical director Dan Ashworth of their plans.

The country's governing body backed that decision in a statement released shortly after the press conference.

"Like the nation, we are disappointed to lose this evening and that our run in this tournament has come to a premature end," the FA statement read.

"We had high hopes of progressing through to the latter stages of the competition and accept that we have not met our own expectations or those of the country.

"We back Roy Hodgson's decision to step down as England manager and will discuss next steps imminently.

"For now, we congratulate Iceland for reaching the quarter-final and wish them well against France at the weekend.

"Finally, our sincere thanks go to the travelling fans for their incredible support tonight and to everyone back home for getting behind the team."