Chelseas chances of qualifying from Group H suffered a blow after a 2-1 defeat in the Olympic Stadium in Berlin following two goals by Iranian international Ali Daei.

Despite a late onslaught from Chelsea when Frank Leboeuf scored a late penalty to reduce the Germans lead, Hertha Berlin managed to hang on for the win and leave the Londoners to rue two defensive mistakes.

Until tonight, Chelsea had never lost to a German club in European competition and Hertha Berlin had never faced an English club before - that was all to change.

Hertha stunned Chelsea after just two minutes when Daei got in between Marcel Desailly and Frank Leboeuf to meet Anthony Sannehs cross with a powerful header to leave De Goey helpless.

It was a wonderful start for the third best supported German club who were playing their biggest game for 20 years after their promotion to the Bundesliga in 1997.

At the other end 30 seconds earlier, Albert Ferrer fed in Gianfranco Zola on the edge of the area but his shot along the ground was saved comfortably by Gabor Kiraly.

Zola looked Chelseas most dangerous player in the opening exchanges despite the close attention of Hendrik Herzog who was carrying out manager Jurgen Roeber's man marking tactic.

Hertha certainly deserved their early lead and Iranian international Daei was proving a real handful to two world class defenders. The man who was signed from Bayern Munich in the summer had a chance after 10 minutes to double the lead.

Sebastian Deisler, the highly rated 19 year-old, crossed from the right flank and, with a standing start, Daeis header lacked pace after it hit the back of Desailly and De Goey gathered safely.

It took Chelsea 25 minutes to begin asserting some pressure in the Hertha Berlin half and certainly looked much more settled and in control of the game without threatening Kiralys goal. Goals were the one thing Chelsea have been short of recently scoring just 3 in 6 matches and none in their last two outings.

As Chelsea upped the tempo, they were nearly punished for sloppy defending after 32 minutes when Michael Preetz was presented with a free header after confusion between Leboeuf and Le Saux in the penalty box. The two Chelsea men soon exchanged words after the ball went harmlessly wide but Gianluca Vialli will be concerned that the only Hertha forward in the box should win the ball.

Despite their pressure towards the end of the first half, the Chelsea attack lacked punch. It took the Londoners a further 44 minutes before they created their second attempt at goal worth any significance.

Tore Andre Flo aggressively shrugged off Dick Van Burik to give himself a sight of goal but he missed the target as Chelsea finished the half much stronger.

Zola gave Chelsea further encouragement with five minutes played in the second half. He produced a clever turn on the right edge of the penalty area and wrapped his left foot round the ball but it was too straight and at a nice height for Kiraly.

Chelsea kept up the pressure and three minutes later Deschamps quickly latched on to a misplaced pass from Sanneh and played in Babayaro. Unfortunately for the English team he perhaps would have been wise to play it across the keeper rather than go for the near post.

Chances were now being created on a regular basis and in the 55th minute Babayaro turned provider for Zola who had made an intelligent run into the box. His touch took him away from goal and was unable to keep his left foot shot on target.

Attempts at goal were now increasing and Tore Andre Flo had two efforts well saved by Kiraly. His first came after 56 minutes when he made space for himself but his left foot effort came off the legs of the keeper. Then three minutes later, his powerfully hit 25-yard shot was too straight and easily dealt with.

It was to be the Norwegian strikers last contribution as Vialli replaced him with 10 million signing Chris Sutton. It was part of a double attack minded substitution as Ambrosetti came on for Ferrer to whip in some crosses from the left wing. Petrescu moved to right back but with licence to push forward at will.

After the flow of one-way traffic in the second half, Chelsea fell for the sucker punch and were caught on the counter attack aided by a mistake by Frank Leboeuf.

Daei pounced on his loose ball and faced with a one-on-one scenario he chose the narrow of the two angles available to him and beat de Goey. The ball hit the near post and rolled over the line despite the desperate attempt of Marcel Desailly to give the Iranian international his second goal of the night.

Two of Chelseas substitutes nearly linked up with a positive outcome but the ball just alluded Suttons boot as he tried to get on the end of a Jody Morris pass after 82 minutes. Minutes before, Desailly blasted over a powerful shot after making a late run into the area.

Seemingly out of the blue, Chelsea were given a lifeline and the opportunity to provide a fantastic climax to the match. With just five minutes remaining, Chris Sutton earned a penalty after Van Burick held him back.

Leboeuf stepped up confidently to reduce the lead and so begin a continuos assault on the Hertha goal in search of an equaliser with four minutes added for injury time.

It wasn't to be Chelsea's night and the club, who three years ago were a point away from being relegated from the German Division Two and facing life in the amateur leagues, held on to record a famous win in their history.

This result confirms the wonderful recovery they have made which has been masterminded by their coach Jurgen Roeber.

Hertha Berlin: Kiraly, Herzog, Schmidt, Van Burik, Dardai (Helmer 80), Sanneh (Veit 67), Deisler, Tretschok (Michalke 12), Wosz, Preetz, Daei
Subs Not Used: Fiedler, Roy, Reiss, Aracic
Booked: Van Burik
Goals: Daei 3, 70

Chelsea: De Goey, Le Saux (Morris 74), Desailly, Leboeuf, Ferrer (Sutton 61), Babayaro, Wise, Deschamps, Petrescu, Zola, Flo (Ambrosetti 61)
Subs Not Used: Cudicini, Hogh, Lambourde, Forssell
Booked: Desailly, Wise, Babayaro
Goals: Leboeuf 86 pen

Att: 55,541