The Desert Foxes boss attributed his side's inability to hold onto their lead in Tuesday's Group H to the fact his players were exposed by much fitter opponents
The north African side surprised the Red Devils by taking a first-half lead through a Sofiane Feghouli penalty, but succumbed to goals from Marouane Fellaini and Dries Mertens to begin their Group H campaign with defeat.
Algeria maintained their lead until the 70th minute when the Manchester United player headed in the equaliser and then the Belgians struck a winner 10 minutes from time.
And Halilhodzic attributed the failure to hang on to a lack of fitness on the part of his squad.
"We let them play in the second half," the 61-year-old told reporters after the game.
"We should have run a little bit more, we should have dared a bit more. We didn't think Belgium would score this second goal. Physically, the Belgium players are much stronger.
"My players were lacking in the second half, some of them were asking to be substituted."
Algeria are playing in only their fourth World Cup after previously appearing in 1982, 1986 and 2010 and Halilhodzic believes that general lack of pedigree was evidenced in his team's downfall.
"The second half showed the difference in experience," he continued.
"They showed freshness, we committed small mistakes. But there was a lot of quality in our play.
"I have a number of players that are rather limited, they're young, they're not that experienced, they can’t play 90 minutes. Each Algerian player needs to improve his physical condition by 30 to 50 per cent. The Belgian players are in much better shape.
"But in spite of everything, we could have won. My team gave as much as they could in the present time."
Algeria will now face South Korea on June 22 before playing their final Group H game against Russia on June 26.