Iraq's footballers extended their fairytale run at the Athens Olympics on Saturday, beating Australia 1-0 to reach the semi-finals of the men's tournament.

Qatar-based midfielder Emad Mohammed struck for the war-ravaged nation with a spectacular overhead kick in the 64th minute.

The victory sparked wild celebrations among the players and supporters and, back home, gunfire and flares lit up the skies.

In central Baghdad, cars honked and revellers sang, clapped and waved Iraqi flags in jubilation.

Iraq, whose only previous Olympic medal was a weightlifting bronze at the 1960 Rome Games, face either Paraguay or South Korea for a place in the final.

Italy's Cesare Bovo headed an extra-time winner to overcome Mali 1-0 in another quarter-final, ending Africa's hopes of a third Olympic title in a row.

Cheered on by supporters on the Greek island of Crete chanting "Iraq is back", Iraq survived a scare two minutes into the second half when Anthony Danze stabbed the ball home from close range only for the "Olyroos" to be ruled offside.

The Iraqis hung on after Mohammed's goal to reach the last four, a remarkable achievement for a team that shares a training pitch with grazing sheep in Baghdad.

In Athens, Bovo struck in the 26th minute of extra time to send Italy into the semi-finals. The result was greeted by a cacophony of boos from Greek fans unhappy at the physical tactics of the Italians.

Italy will play either Costa Rica or favourites Argentina in Tuesday's semi-finals.

African teams have won the gold medal at the past two Olympics - Cameroon winning in Sydney four years ago and Nigeria victorious at the 1996 Atlanta Games.