England completed only 60 per cent of their sets while chasing points in the second half against Papua New Guinea on Friday.
Coach Brian McDermott blamed the lack of flow after the break for his side's failure to build a bigger margin.
England had begun the match 68 points behind Samoa on points differential and needed to win by at least 50 to keep their semi-final hopes alive.
They also needed Tonga to beat Samoa on Sunday.
England led 22-0 after 20 minutes in Wollongong, but scored no points during the next 50 minutes as Papua New Guinea crossed twice.
The 34-12 result means England now need Tonga to defeat Samoa by 47 points or more to progress.
It could be the first time England have failed to reach the World Cup semi-finals.
"It looks like we're going out of the tournament with that scoreline there," McDermott said.