Chelsea's defence of the FA Cup came to an end as Everton scraped into the fifth round on penalties.
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Everton edge replay on penalties
Chelsea's defence of the FA Cup came to an end as Everton scraped into the fifth round on penalties after Ashley Cole missed in the shoot-out.
The initial tie at Goodison Park last month failed to separate the sides and the replay at Stamford Bridge turned out to be just as close, with the scoreline goalless at 90 minutes and then 1-1 after extra time.
Frank Lampard's strike in the 104th minute had looked set to seal success for the Blues, until Leighton Baines curled in a stunning free-kick right at the death.
Baines saw his spot-kick saved in the shoot-out, but Nicolas Anelka's penalty was also kept out by Tim Howard before Cole's wayward effort over the bar allowed Phil Neville to score the winner.
Everton had been impressive in the opening 45 minutes but it was Chelsea who carved out the better chances and Howard was called upon to make several fine saves.
Referee Phil Dowd was then tested on the stroke of half-time as Ramires went down after attempting to go round Howard, but it was judged to be a dive and the Brazilian was awarded only a yellow card.
Chelsea continued to look the more threatening after the break and only an instinctive point-blank stop from Howard prevented Lampard from breaking the deadlock with a poked effort.
Everton then thought they had snatched victory in the 89th minute when Marouane Fellaini reacted quickest to fire home a rebound, only to discover the flag was up for offside.
The decisive moment appeared to have arrived in the first period of extra time when substitute Anelka's cross was chested down by Didier Drogba for Lampard to provide the finish.
However, with just over a minute of the contest remaining Everton won a free-kick just outside the area and Baines stepped up to equalise brilliantly.
Everton then held their nerve in the shoot-out to set up a home date with Reading in the next round.
Point to prove
With visiting boss David Moyes having branded Sunday's defeat at Bolton one of the worst performances of his near nine-year reign, the Merseysiders certainly had a point to prove.
The same could be said for Drogba, who was controversially axed in favour of Fernando Torres for Monday night's goalless draw at Fulham.
But the Ivorian looked far from sharp early on and needed several minutes of touchline treatment after an innocuous Phil Jagielka challenge in the 14th minute.
Chelsea should have taken a 20th-minute lead when the post saved Jagielka from glancing in an own goal from Lampard's free-kick and John Terry skied the close-range rebound.
Blocks from Sylvain Distin and Howard then prevented Lampard and Florent Malouda putting the home side ahead after excellent work from the recalled Salomon Kalou down the right.
Drogba then held off Jagielka and produced a brilliant through-ball for Malouda, whose clipped finish was saved by the feet of Howard.
Malouda picked up the game's first yellow card for clattering into Seamus Coleman and Ramires followed in controversial fashion on the stroke of half-time after being adjudged to have dived in the box under a challenge from Howard.
Ancelotti withdrew John Obi Mikel for the axed Michael Essien during the interval.
Baines and Coleman were booked for fouls on Ramires and Branislav Ivanovic before bad marking saw Lampard send a free header off target from Drogba's free-kick.
The recalled Leon Osman almost made him pay by