Sweden took the lead against the Euro 2012 co-hosts in Kiev but Andriy Shevchenko struck twice in the second half to leave Erik Hamren's team bottom of Group D.
The Sunderland winger knows the team must recover quickly to turn things around and pick up the points required to advance from the section.
"Of course it's very difficult, you only have three games to collect as many points as you can and we're bottom of the group now," Larsson told Goal.com.
"I think the disappointment is the big thing now, and we need to try to get over it and the England game is coming up fast. If we can play our football the way we know we can then nothing's impossible."
Sweden face Roy Hodgson's men this Friday and Larsson expects a tough test against the Three Lions, who drew their opening game against France, in a match he labels a "must win".
"It will be a completely different game," the 27-year-old added. "We obviously haven't looked at England that much yet, and we'll go through them in the next couple of days and hopefully put a plan together on how to beat them.
"It’s obviously going to be a very tough game. All three games are going to be tough, and we lost the first one, so we must win the second one.
"We need to play our game, the game we barely got going today [against Ukraine], which is the biggest disappointment of all. If we do that, we know we can win the game."
|5/2||Sweden are 5/2 with Sportingbet to beat England on Friday.|
Larsson admitted that the contest against the co-hosts would have become more comfortable for Sweden had they been able to settle the game down and resist a Ukraine reply immediately after taking the lead."Of course we’re weren’t looking for it to end up like that," he said. "Probably just before our goal and the couple of minutes after was when we starting playing our game.
"We started passing the ball around and found some space, and obviously it’s very important to keep the lead for a while.
“We felt we got the game at that stage just where we wanted it to be; we were winning and we finally got some space to pass the ball around.
"It was a real sucker punch when they scored and obviously they lifted the crowd, and I think we needed to keep the lead for 10 or 15 minutes.
"We're all disappointed together, and let's hope we can repay them in the next game."