David Melvin reporting from Kaunas

RANGERS' European dream came crashing to an end when Linas Pilibaitis' goal for Kaunas secured their place in the third qualifying round of the Champions League.

With Walter Smith's side seemingly set to hang on for an away goals win they were dealt a cruel blow in the 86th minute when Linas Pilibaitis rose to head home a winner and end the Ibrox club's involvement in European competition this term.

As with several occasions last season, a clean sheet at Ibrox in the opening leg six days previously looked set to prove vital as Smith's side led on away goals going in to the late stages in Lithuania.

Kevin Thomson's first half strike was cancelled out by a stunning free kick from Nerijus Radzius, but it still looked like it would be enough to take the visitors through with a 1-1 draw.

However that late intervention would prove to be a devastating blow as the Lithuanian champions put paid to any hopes Rangers had of matching last season's exploits in continental competition.

Thomson's breakthrough came after an opening half hour that had failed to produce much of real promise for either side.

A scrappy midfield battle had led to bookings for Lee McCulloch and goal scorer Thomson as well as the home side's Pascal Mendy.

But the ever persistent Nacho Novo finally got his reward when he won a battle wide on the left and played in the on rushing Thomson.

The midfielder is not renowned for his scoring tally but he neatly slotted the ball between Marian Kello's legs to break the deadlock.

But his goal would only earn Rangers the lead for 10 minutes when with half time fast approaching Radzius produced a stunning free kick from 35 yards that flew past Allan McGregor to level the scores three minutes before the break.

The effects of that blow were clearly still being felt in the early stages of the second half as Kaunas, lifted by their equaliser, looked to capitalise on an unsteady restart from Smith's side.

Just 10 minutes into the second half Marius Cinikas had Rangers fans holding their breath as he waltzed into the box and rattled McGregor's crossbar.

Rangers were struggling to pose similar questions of Kaunas and when two free kicks in dangerous positions from McCulloch and Charlie Adam got no further than the defensive wall, Smith made his first change.

That set piece would prove to be Adam's final contribution as he was replaced by Andrius Velicka after 65 minutes - the Lithuanian joining the action against his former club.

With a little over 10 minutes remaining the striker had the chance to ease the nerves in the Rangers ranks but his effort from 12 yards flew over Kello's bar.

But it was at the other end that the goal came with just four minutes remaining.

Smith threw Kris Boyd and Kyle Lafferty in to the action as he desperately sought the goal that would turn the tie again.

It wasn't to be and Smith must now put European action behind his side and lift them for an assault on the home front, which starts this weekend when the team goes to Falkirk for the start of the SPL.