GB's Jess Varnish and Victoria Pendleton missed out on a ride-off for gold after being relegated by officials for a takeover infringement.
Varnish and Pendleton had set a world record in the two-woman, two-lap event in qualifying, seeing the mark broken moments later by China.
The Britons set the second fastest time in the first round and were due to advance to the final against China, who set another world record, but officials ruled against them.
Pendleton was set to resume competition in the keirin on Friday, but for Varnish, who has focused on the starting lap in the event, the Games are over.
It meant Germany were promoted to the final against China, with Australia and Holland to contest bronze.
The Duke and Duchess of Cambridge and Prince Harry arrived after the drama to a full to capacity velodrome, featuring an expectant crowd.
A tearful Pendleton, crowned the queen of the track after her Beijing sprint
success, had no qualms with the decision, while 21-year-old Varnish was so
devastated she opted out of media duties.
Pendleton said: "It was an illegal change. I came through in the change zone
about a metre too early; we're talking about one hundredth of a second of a
"Jess moved up a fraction too early and I just saw the door and went for it,
because that's my cue to try to squeeze underneath her as quickly as possible.
"It's one of those things that happens. It's quicker than a blink of an eye.
"You have to stick by the rules. The rules are there to make it a fair sport.
"Unfortunately we fell on the wrong side of that today. It wasn't intentional,
British Cycling performance director Dave Brailsford was seen speaking to race commissaires and reviewing video footage, with Britain's ride being scrutinised, but there was no right to appeal.
Pendleton told the BBC: "We didn't change over in the right zone of the track.
It's really hard when you're going that speed.
"We've never really had an illegal change before. It's not something we've
been too concerned about in the past but it's just one of those things that
happens. It's not Jess' fault, it's not my fault - we're both partly to blame,
"We were probably just a bit too overwhelmed by the whole thing, a bit excited
about our ride and just a bit too eager. We should have just kept a lid on it.
"It's just one of those things. Now and again rubbish things happen and this
is one of those days.
"On the whole we've had a really excellent run. We were very pleased with our
time. We were both hoping to go faster, a little bit of a gear change in the
For more than two years Varnish has focused on the single lap at the start of
the team sprint.
Pendleton was adamant her young team-mate will recover.
The 31-year-old from Stotfold, who is set to retire after the Olympics, said:
"It's not quite her Games over because she's going to have many more Olympic Games to go to, I'm sure. This is the end for me but it's just the beginning for Jess.
"It's an amazing opportunity for her and an experience to make the most of
what it's like to be in an Olympic environment.
"I'm 100% sure Jess will go into Rio and absolutely smash it.''
Pendleton's final competition of her track career is set to continue tomorrow
in the motor-paced keirin, an event in which she won the world title in 2007 but
has had limited success since.
The individual sprint - in which Pendleton is a six-time world champion and
defending Olympic champion - begins on Sunday and concludes on Tuesday's final day of competition.
"The only positive is I know my form is really good because that's by far the
fastest second lap I've ever done and then I backed it up with the second
ride,'' Pendleton added.
"All I can do now is keep my head down, focus on tomorrow, the following
sprint competition the day after that and give it everything I've got.''
what do you think?
the officials where told to use their discretion but instead chose to punish over one one hundredths of a second mistake.
Yep, a jumped up official making a name for himself