Balotelli, who was questioned by some critics for lacking last-shot ability, headed home his first goal and struck the second in the first half to pave the way for Italy, who will face Spain in the final on July 1 in Kiev.

"Mario was excellent like the entire team. He ran into the space in time and were always available in attack. He was concentrated and really in the game," commented by Italian coach Cesare Prandelli.

"We risked a bit today. With a bunch of talented players with great qualities, we can take the control and that's the style what I expect for Italy. All we need to do now is try to recover as soon as possible. Spain is a terrific side," added by the Italian.

Germany, which had been on a world-record 15-match winning streak in competitive fixtures before Thursday's clash, fought to the last second with a Mesut Oezil's penalty in the injury time.

They can still leave the stage with heads up for their faith in attacking football and courage to send a youngest squad to the tournament.

"We won 15 matches in a row but lost to an incredible Italy tonight. Twice in defence we didn't pay attention. Then it was very difficult to turn around," said Germany's coach Joachim Low.

"However, this youngest team have played a wonderful tournament. They can still develop in the future and cope with the difficulties now."

The victory extended Italy's dominant record against Germany in competitive meetings to four wins and four draws.

Facing a favourite side which had scored freely with their attacking style in Poland and Ukraine, Italy survived an early scare just after the opening whistle when Mats Hummels' shot from a corner was blocked on the line by a near-post Andrea Pirlo, who pulled strings in the 90 minutes to help Italy stand keep shape and stand solid in the midfield battle.

Giorgio Chiellini, who returned to the starting left defender after injuries, sent Antonio Cassano clear down the left in the 20th minute when the AC Milan forward fed Mario Balotelli in the central area who then found the net with a close-range header.

Balotelli continued his hot form after 16 minutes when Riccardo Montolivo's long ball helped him pass the German backline in the twinkling of an eye and the Manchester City forward fired the ball from the edge of box into the top right corner.

"Super Mario", who was unable to restrain his excitement, took off the shirt in the 56,070-seat National Stadium, only to be cautioned by the referee with a yellow card.

After the break, Germany brought in Marco Reus and Miroslav Klose to replace Lukas Podolski and Mario Gomez, making the squad pacier and direct in attack.

Italy replaced forward Antonio Cassano with Bologna midfielder Alessandro Diamanti, changing from an offensive-minded show in the first half to their classic counter-attack strategy.

Italy, which has not lost to Germany since a 2-0 friendly defeat in Zurich in June 1995, nearly sealed the victory with one clear chance in the last 15 minutes but Antonio Di Natale struck the ball just past the post.

Germany, dangerous from many chances though, failed to beat an in-form Gianluigi Buffon and a solid Italian defensive line.

Oezil, the most dynamic and creative midfielder in his side, scored Germany's last goal in the tournament from the penalty spot.

The last semifinal meeting between the two traditional powers was at the 2006 World Cup, in which the Azzurri gatecrashed host Germany's party 2-0.

"The disappointment was the same. Both defeats were very difficult. Our players did what they could in the second half. But you have to admit that they played better. We need to learn from this and move on," said Loew.