Israel's World Cup hopes were left hanging by a thread after they were beaten by Group Two leaders Greece in Heraklion on Wednesday night.
The teams were locked 1-1 in Ramat Gan on Saturday and the return started in similar fashion.
Israel controlled the early stages but lacked quality in the final third. Greece then started to dominate with defender Sotirios Kyrgiakos spurning a golden opportunity.
It came as no surprise when Dimitris Salpigidis opened the scoring on 32 minutes with a sweetly struck effort from the edge of the box.
Israel boss Dror Kashtan took action almost immediately, replacing Yoav Ziv with Elyaniv Barda five minutes before the interval. He also introduced Liverpools Yossi Benayoun, who despite illness and injury, came on for Ben Sahar for Benayoun at half time.
The gamble paid off 14 minutes into the second half when Elyaniv Barda, Israel's scorer on Saturday, capitalised on poor defending by netting the equalizer.
The goal gave Israel confident but they were unable to press on and were eventually caught with a sucker punch after 65 minutes as an error from Biram Kiyal saw him haul down Karagounis in the box, allowing Georgios Samaras to slot home the resultant penalty. From that point the result never looked in doubt as the 2004 European champions consolidated.
Kashtan claimed: "We controlled the match. I'm disappointed with the result, but certainly not disappointed with my players and with their ability."
With Switzerland defeated Moldova 2-0 and Latvia beating Luxembourg, Israel slipped to fourth in the group and qualification for the finals for the first time in 40 years look unlikely.
Israel has four games left, including three at home, but must now rely on their rivals slipping up. There may yet be a twist however with Greece travelling Switzerland in their next game.
Israel welcome Latvia on September 5, followed by home matches against Luxembourg and Moldova. They complete their qualifying programme in Switzerland on October 14.
Kashtan remains upbeat: "I was taught that in sports its not over until its over. We still have four matches to play and there might be surprises in the group."
Greece: Chalkias, Seitaridis, Katsouranis, Charisteas, Karagounis (capt), Moras, Salpingidis, Torosidis, Kyrgiakos, Gekas, Papadopoulos
Israel: Awat, Saban, Ben Haim (capt), Alberman, Ben Dayan, Kayal, Schechter, Golan, Deinan, Ziv (sub: Barda 40), Sahar (sub: Benayoun)
Booked: Ben Haim 85
Goal: Barda 59