The World Cup and Ballon d'Or winner felt the Roma defender was guilty of some sloppy defending on Friday night.
Pablo Osvaldo gave Cesare Prandelli's men the lead but two goals from Nicklas Bendtner turned the game on its head, before Alberto Aquilani salvaged a draw for the visitors.
''Last night in Denmark Federico Balzaretti should’ve been able to stop Nicklas Bendtner jumping so freely. You need to mark in the box, there’s no other way around it," Cannavaro told Radio Deejay.
The Al-Ahli assistant coach, 40, then offered an in-depth critique of the quality of players coming through the Italy ranks and believes youngsters are simply not playing enough football in modern day society.
''In my days we played in the streets and would touch the ball a thousand or two thousand times a day,” Cannavaro added.
''Now they lack that sense memory with the ball. They play for an hour at football school and that’s it. We try to teach children tactics at that age, but that can be learned about later, whereas getting a feel for the ball and how to move it has to develop when they are still young.''
Despite the result in Denmark, Italy has already secured a berth at next summer's World Cup in Brazil, amassing 21 points and keeping an unbeaten record in Group B.