After dominating possession and territory for the majority of the game, Mikel Oyarzabal's 80^th minute header proved the difference at Sapporo Dome.

The result means that Graham Arnold's side will need a win or draw in their final group C clash with Egypt on Wednesday to keep their campaign alive. Spain took spot while Argentina bounced back from their shock loss to the Olyroos to beat Egypt 1-0 on Sunday.

Australia's defeat was further hampered by three players copping suspensions. The Olyroos had six starters with yellow cards next to their name heading into the clash, with Riley McGree, Mitch Duke and Nathaniel Atkinson all receiving another yellow on Sunday night.

Spain had a setback ahead of Sunday's clash when captain Dani Ceballos was ruled out due to an ankle injury suffered in their 0-0 stalemate with Egypt.

It was a dour affair early as Spain looked to control possession while Australia attempted to disrupt their rhythm. The Olyroos' first forward thrust came in the 13^th minute when Daniel Arzani found himself inside the box, but he couldn't beat Spain's defence.

Soon after, Spain had two great shots on goal, with goalkeeper Tom Glover pouching Pedri's attempt while Mikel Oyarzabal hit the woodwork.

Spain continued to attack, with the Olyroos defence holding their nerve. On the stroke of half time, Spain pressed hard and the ball bobbed around in Australia's box - however - they did enough to hold on.

The score remained 0-0 at the break.

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Spain continued to push hard for their first goal of the tournament in the second stanza, with the Olyroos defence scrambling to keep out their opponents.

However, the introduction of substitute Marco Tilio paid dividends, with the Aussies immediately looking more threatening in attack. At the other end, Dani Olmo and Pedri both looked threatening inside the box, but Glover proved up to the task on both occasions.

Substitute Rafa Mir then had two in-close chances, but couldn't capitalise for Spain.

However, the pressure finally told in the 80^th minute, with a lovely cross finding Spain's Oyarzabal inside the box, and his header found the back of the net.

The goal saw Australia lift their ascendancy in the front third, but Spain's defence continued to prove solid.

Tensions grew in the dying minutes following a collision between Spanish gloveman Unai Simon and Aussie substitute Kye Rowles. But it was the last major moment of the night, as Spain prevailed 1-0.