Four years on from one of English football’s most embarrassing nights in losing 2-1 to Iceland at Euro 2016, the Three Lions were far from the free-scoring force that romped through Euro 2020 qualifying in their first match for 10 months.
Harry Kane had an early goal wrongly ruled out for offside before Kyle Walker was sent-off for two bookable offences 20 minutes from time.
All of Iceland’s good defensive work was undone in the 89th minute when Sverrir Ingason was also harshly dismissed for a second booking when he blocked Sterling’s shot with his arm.
With Kane having been replaced by Mason Greenwood, Sterling took responsibility from spot, but the drama did not end there.
Straight from kick-off, Joe Gomez was adjudged to have bundled over Holmbert Fridjonsson inside the area, but Bjamason blazed the resulting penalty over.
Southgate handed an international debut to Manchester City midfielder Phil Foden, while Southampton’s James Ward-Prowse started for the first time in a competitive fixture for his country in an experimental line-up.
However, there was still plenty of enough experience and promise in a front three of Kane, Sterling, and Jadon Sancho for England to have had a far more comfortable afternoon in Reykjavik.
Kane had the ball in the net for what he thought was his 33rd international goal inside six minutes when he bundled in at the back post.
However, the England captain was wrongly flagged for offside and with no VAR in operation, the visitors were denied.
Sancho has been linked with a move to Manchester United from Borussia Dortmund for more than £100 million in recent months and the 20-year-old was England’s most dangerous weapon early on as he eased past his marker before teeing up Declan Rice, who miscued his shot with the best chance of the first half.
Arnor Traustason curled a free-kick wide with Iceland’s only attempt on goal until stoppage time, but the move leading to that effort still proved costly for England as Walker picked up his first yellow card.
Southgate’s men continued to enjoy the vast majority of possession in the second period, but the closest they came to breaking the deadlock before the dramatic finale was when Iceland’s Kari Arnason flicked Kieran Trippier’s free-kick onto his own post.
Moments later Walker’s ill-judged lunge to break up an Icelandic counter-attack left his side a man down.
A breakthrough did not look like coming until Sterling collected an overhit corner and the ball struck Ingason’s arm in his attempt to block the shot.
Sterling coolly rolled his penalty straight down the middle and how Bjarnason wish he had showed the same composure as his wild finish let England off the hook.