New Zealander Hayden Paddon has been forced out of Rally Italy on the island of Sardinia after small mistake proved extremely costly.

The Hyundai works driver was in control of the rally but made a small mistake towards the end of the second full day and damaged the right rear of his i20.

The 30-year-old was able to limp to the end of the stage, losing a little over a minute but was unable to make it to the next special stage. He will continue overnight in the rally's final day but is assigned times for the stages he was unable to start and has dropped to 12th overall.

It was a cruel way to end the rally and continues a disappointing season.

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"I am devastated," Paddon said. "It was such a schoolboy error, which caused us to break the rear wheel. I turned in too early and clipped a bank. That was that. There is no one to blame but myself, and I am hugely sorry for the team and all of our supporters.

"It's important that I learn from this and do all I can to put things right at the next event. Things were going so well and we were maintaining our lead, which makes it even more frustrating."

Estonian Ott Tanak inherited the lead in his M-Sport Ford. He has never won a WRC event and will be looking to hold off Toyota's Jari-Matti Latvala on the final day for a maiden win.

Tanak holds a 24.3s advantage over the Finn.

Paddon's Hyundai teammate Thierry Neuville is third 1:02.2s adrift of Tanak.