England face a tough task to reach the World Cup knockout stage as Uruguay striker Luis Suarez's brace condemned them to a second straight defeat.
Suarez headed in Edinson Cavani's cross to put Uruguay ahead before Wayne Rooney swept in a Glen Johnson's low centre.
Liverpool striker Suarez then rifled in with six minutes remaining to leave England bottom of Group D.
Defeat means England will be out if Friday's match between group rivals Italy and Costa Rica ends in a draw.
Uruguay coach Oscar Tabarez claimed Suarez would not be fully fit after missing their opening defeat against Costa Rica but he still possessed too much guile and menace for an England team who never built on the promise they showed even when losing against Italy.
Rooney struck the bar and was England's main threat but Uruguay - or to be more precise Suarez - produced the quality and clinical finishing that decides games such as this.
England must now await the outcome of the meeting between Italy and Costa Rica but the odds are stacked against them escaping this tough Group D. For all their potential, the record reads played two and lost two - and that rarely adds up to anything other than elimination at the World Cup.
And what an anti-climax it will be for manager Hodgson and his players if England are left playing for nothing other than pride in their final group game against Costa Rica in Belo Horizonte.
As expected, Hodgson played Rooney in a more central role and moved Raheem Sterling wide - but England struggled to find the same energy levels that fuelled such a positive performance against Italy.
Suarez did not look fully match-fit but all the predatory qualities were there and it was inevitable he would become the central character in the main drama.
Daniel Sturridge and Sterling could not pose the same threat as they had in Manaus and it was Rooney who came closest with a free-kick just inches wide and then a header against the bar at the far post from Steven Gerrard's free-kick.
England were looking nervous at the back and were fortunate to survive when Phil Jagielka's sliced clearance fell to Cristian Rodriguez, whose rising drive from the angle just cleared the bar with goalkeeper Joe Hart beaten.
Uruguay were the more ordered side and the goal arrived from the most inevitable source seven minutes before half-time as Suarez marked his return in style.
Gerrard conceded possession in midfield and when Edinson Cavani delivered the perfect cross, Suarez pulled away from Jagielka to head across Hart before running to celebrate with the Uruguayan medical team who have nursed him back to fitness.
England, as they did against Italy, responded strongly and Uruguay keeper Fernando Muslera needed to be alert to block Sturridge at his near post.
In a chaotic start to the second half, Suarez was wasteful as England appealed for offside and Cavani was guilty of a bad miss as he ran through on Hart.
Rooney was almost the beneficiary of that escape when he found room in the area only eight yards out, but his shot was straight at Muslera.
Hodgson, knowing what defeat would mean, made his first change after 64 minutes by sending on Ross Barkley for Sterling, who had struggled to impose himself on Uruguay as he had against the Italians.
England were moving into desperate times as the clock ran down - and it was Rooney who produced the goods with the equaliser 15 minutes from time, tapping in from close range from Johnson's perfect cross.
Just as the momentum looked to be shifting towards England, Suarez was the tormentor again, latching on to the ball after Gerrard had lost an aerial challenge with Cavani, steadying himself before rifling an unstoppable finish high past Hart.
It was the final word on this game - and probably on England's World Cup.
Credit: BBC
