With just over five minutes gone, Iceland almost struck first with an effort by captain Hallgrímur Jonasson from a corner, and Rui Patricio had to be alert to deny the forward an opening goal.

However Portugal were not fazed, and took the lead just before the quarter-hour mark through Nani. Eliseu’s ball in from the left was not at an ideal height, but the Manchester United winger improvised to flick a clever header into the back of the net for his 10th international goal.

Portugal put Iceland under severe pressure following the opener, and the visitors hit the self-destruct button on 22 minutes, when Jonsson’s dreadful square back-pass across the six-yard box evaded goalkeeper Stefan Magnusson and allowed Nani to slip in for his second of the night.

Cristiano Ronaldo nearly grabbed another on 27 minutes when he cut in from the left flank, but Magnusson managed to divert his effort just over the crossbar. Moments later, Iceland launched a counter-attack through Birjir Bjarnason’s enterprising run down the right flank, but the midfielder dragged his shot wide of the far post.

Iceland were causing problems from set-pieces, but the Portugal managed a third goal through Helder Postiga a minute before half-time. Bruno Alves sent in a telling cross into the heart of the area, and Postiga reacted quickest to sneak the ball in off the underside of the crossbar.

The hosts started the second half strongly, and Ronaldo had a chance when he clipped the top of the bar with a stinging effort from just outside the box. However, two minutes later, Iceland pulled a goal back through a set-piece. Jonsson out-jumped Rolando to nod the ball into the path of Jonasson, who headed home past the helpless Patricio.

Portugal went close through Rolando on the hour mark, but Iceland again took advantage of Portugal’s soft centre to score their second in much the same manner as the first. Jonsson and Jonasson combined again from a corner, the former beating Rolando in the air to find the latter, who flicked the ball home from barely a yard out.

Iceland smelled blood, and laid siege to the Portugal penalty area with a series of set-pieces and driven long-throws from Aron Gunnarson. But despite more than a few nervy moments, Portugal did just enough to see off the threat, and sealed the win through Joao Moutinho in the 81st minute, the substitute slotting home Eliseu’s cutback.

Six minutes later, the full back Eliseu put the icing on the cake with the goal of the night, cutting in from the left flank and unleashing a 20-yard effort with his wrong foot that sailed into the back of the net.

However, there was still time for Iceland to grab another goal after Rolando conceded a penalty with seconds remaining. Gylfi Sigurdsson kept his nerve from the spot to put the finishing touches on an extraordinary night of football in Porto.

Portugal and Denmark are both level at the top of Group H on 16 points, and now play each other in the final group game on Tuesday night in Copenhagen to determine the winner of the group.