Germany escaped with a 0-0 draw in Reykjavik after Iceland captain Eidur Gudjohnsen missed the best chance of the match.
Iceland remain top
The draw kept Iceland top of UEFA EURO 2004™ qualifying Group 5 on 13 points, one ahead of Germany although Rudi Völler's team have a game in hand. Scotland are still in contention as well following their 3-1 win against the Faroe Islands. Berti Vogts's team are third on eleven points having played as many games as the Germans.
Germany take control
At the Laugardalsvöllur stadium, Germany had more possession in the first half with Carsten Ramelow and Michael Ballack running things in midfield. However, the Icelandic defence dealt with everything that was thrown at them and Germany found it difficult to carve out any real openings.
Iceland play waiting game
They did threaten at times but lacked focus in their finishing as Miroslav Klose miscued his shot when well placed, while Ballack and Bernd Schneider both shot straight at Iceland goalkeeper Árni Gautur Arason when presented with respectable chances. The home team, meanwhile, mainly sat back and waited for the opportunity to counterattack.
However, they did create the best chance of the opening period when Thordur Gudjónsson found Gudjohnsen with a splendid long pass. Gudjohnsen raced clear but, with only Oliver Kahn to beat, shot straight at the FC Bayern München keeper. Germany, in fact, were hanging on in the closing minutes of the half and Heidar Helgason could have scored with a header, but it bounced wide.
Iceland continued to threaten in the second period and went close in the 54th minute as Christian Wörns cleared from his own goalline twice in the space of a few seconds. First, he received assistance from Frank Baumann to block Larus Sigurdsson's close-range effort before then heading away Helgason's follow-up attempt.
Germany subsequently recovered and threatened through the lively Sebastian Deisler - on as a substitute after a 16-month absence from the national team due to injuries - and Kevin Kuranyi, who had his team's best opportunity in the second half, lobbing Arason but sending the ball a fraction high.
Iceland dream lives on
Germany now take on Scotland in Dortmund on Wednesday while Iceland do not play until 11 October, when they travel to Germany for the last game of their campaign knowing that they have a chance of at least qualifying for the play-offs for the first time in their history.