David Moyes’ side had taken the lead as Nikica Jelavic pounced on a mistake by Jamie Carragher however Sylvain Distin’s poor back pass was intercepted by Luis Suarez who grabbed an equaliser before Andy Carroll headed home four minutes from time.
Neville told ESPN: “It’s disastrous really. Wembley’s not a place for losing particularly in semi-finals.
"We thought we had a great chance, we thought it was going to be our year. We felt as if we had the momentum but we fell just a little bit short on the day.
“First-half we played really well and maybe it was in the first-half when we had them when we probably could have gone for the second goal and been a little bit braver.
“We came out second-half and we just didn’t impose our game. We didn’t pass the ball like we did in the first-half and Liverpool’s strength and quality shone through in the end.”
Neville admitted Everton sat back too much in the second half allowing Liverpool to come at them as they created a host of chances and the former Manchester United man feels they should have prevented the Reds' quality players finding time and space in good areas.
He added: “They’ve got good front players, they’ve got good players all over the pitch to be honest. You can’t allow these players space and time. You can’t keep giving them chances because eventually they’ll punish you.
“With the chances that they created and the pressure they put on us a goal felt like it was coming. After 60-70 minutes we felt as though we had weathered the storm. In the end though we can’t have too many complaints.”
Neville believes the Toffees have to take the defeat on the chin and not let it affect their season and also defended Distin following his crucial error which allowed the Reds back into the game.
He added: “He’s [Distin] devastated but he’s been a fantastic player for this club and he should hold his head up high.
"We win together we lose together at Everton that’s the spirit that we’ve got to show today. We’ve got a lot of supporters down here who will be as equally disappointed sometimes in football you just have to take it and take the punishment that goes with it.
“That’s the aim now we can’t let this massive slip up effect for us for the rest of the season. A sign of good players is that they bounce back after defeat.
“You’ve seen with most champions that succeed and we’ve got to make sure we stay in that seventh position this season regardless who it’s above. Considering where we were in October/November time the state that we were in I think that would be a miracle for the club.”