New Zealand, ranked 78th in the world, took a shock lead on seven minutes after struggling Italy captain Fabio Cannavaro made a hash of trying to clear a free kick into the box and Shane Smeltz poked home.
Italy had talked all week about the difficulties an unchanged New Zealand would pose from dead balls but they did not deal with the danger even if there was a slight suspicion of offside.
Coach Marcello Lippi stationed himself at the edge of his technical area with a worried look and his team increased the tempo with Riccardo Montolivo striking the post from distance before they levelled on 29 minutes.
Daniele De Rossi tumbled in the box under pressure from Tommy Smith as a cross came over and Vincenzo Iaquinta calmly slotted in the debateable spotkick.
In Image: New Zealand's Tommy Smith, right, competes for the ball with Italy's Gianluca Zambrotta, middle
Coverage: FIFA World Cup