Many felt that the loss of Alan Thompson, Didier Agathe and Jackie McNamara were as much to blame as referee Urs Meier and the hapless Celtic defence which also got the endorsement of an unlikely source.

O’Neill said: “I have to admit that the squad wasn’t strong enough but that’s the way it goes.”

It was a similar story two seasons ago when Celtic were pipped with nine points from a group of Juventus, Porto and Rosenborg.

But despite failing to learn from their mistakes in the past, the Northern Irishman disagrees with some of the comments claiming that last season’s UEFA Cup finalists have not made progress since then.

“After Wednesday evening you analyse things but I believe in the players,” insisted O’Neill.

“It is my own belief that this side has improved since we went to Juventus a couple of seasons ago.

“We have made real progress in the last few years and a few years ago we had a preliminary qualification game in Luxembourg so we have made some sort of progress and we have improved the coefficient.”

O’Neill was promised more money to spend on players if his team got through to the next stages of the Champions League.

That would have helped him take them to the next level but now the board are unlikely to release much cash to enhance his squad.

But the Celtic boss insisted that was the least of his concerns as he tried to pick them up for the visit of Dundee tomorrow.

Winning the Bank of Scotland Premier League title would give them an automatic return to the Champions League next season and he believes that will be enough to lift the gloom at Parkhead.

“I would consider that closer to the time of the January window,” said O’Neill, whose side are five points clear of Rangers.

“But it wouldn’t be at the top of my list of thoughts just now. We need to get over the disappointment and reflect on the UEFA Cup draw.

“We have to focused completely on Dundee and we have to win to keep the gap there because the gap is very small and anything can happen.

“I’d like to be in a position by the time the UEFA Cup comes back where we are still a couple of points clear in the league.

“The older I get the more time I reflect but I will be up for the game tomorrow.”

Ulrik Laursen is also backing his team-mates to bounce back despite the depression in the dressing room on Wednesday night.

The Danish defender said: “It was disappointing and I could feel what the rest of the players did.

“They had battled away and you could tell on their faces after the game they were absolutely gutted.

“People look after you here even though it was a great disappointment.

“We knew we didn’t make it to the knock-out stages of the Champions League but we still know what we have to do domestically to get into the Champions League again so we have to be focused.”

O’Neill also denied that anyone was pointing the finger at Magnus Hedman and Bobo Balde after their mistakes in France.

Neil Lennon branded some of their defending a “joke” and he was backed by a number critical team-mates.

But the Celtic boss said: “Some players played exceptionally well in the match but collectively I don’t think anybody was running around and going for personal glory.”

Opinion is split over Meier’s decision to award the French champions a late penalty and penalise Balde for handball.

But team-mate Laursen admitted that had it happened in the Lyon box then Celtic would have been remonstrating with the referee.

He concluded: “If it would have been at the other end we would have been screaming for it.”