England went down 1-0 to China at the Macau Olympic Stadium in their final warm-up match ahead of next month's World Cup finals.
A mix-up between Everton keeper Rachel Brown and Arsenal central defender Mary Phillip gave China their goal.
England hit back hard and thought they had equalised through Chelsea striker Eni Aluko, only for play to be called back through an offside decision.
England start their World Cup with a game against Japan on 11 September.
After the loss, national coach Hope Powell said: "The goal we gave away was a silly one and then the equaliser was ruled out by a very dubious decision.
"But we outplayed China at times and didn't deserve to lose - in a tough game our girls looked just as fit and strong as the Chinese players."
England got much closer to the host nation than they did when losing 2-0 to them at the China Cup in January.
"We performed better than we did in January in spite of the fact that the conditions were a lot more difficult," said Powell.
"It was extremely hot and humid, so much so that the girls were absolutely drenched in sweat when they came off.
"But they not only lasted the 90 minutes, they spent the closing stages on the attack going all out for an equaliser and that was a very encouraging sign.
"They've settled well in the week we've been in Macau and their attitude and application have been first class, which is very pleasing heading towards the finals."
England's gain has been the Women's Premier League's loss, with the second week of the season even more badly hit than the first one due to international call-ups.
The only match which took place saw newly promoted Watford collect their first points as a top-flight club with a 3-2 win against Blackburn Rovers.
The Hornets twice had to come from behind but ended up with a well earned victory thanks to a late penalty by Ashlee Hincks.
Striker Helen Lander levelled the Rovers opener within 60 seconds of Natalie Brewer's 15th minute strike.
Former England winger Karen Burke restored the visitors lead second before half-time, but another ex-England player, striker Ellen Maggs, equalised in the 65th minute.
And after a foul on Lander 12 minutes from time, Hincks - a close season signing from Charlton Athletic - hit the winner from the spot.
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