Coach Eddie Jones says "we let ourselves down in a couple of areas" as England's Grand Slam hopes disappeared in a 21-13 defeat by Wales in Cardiff.
The visitors led 10-3 at half-time, but tries from Cory Hill and Josh Adams carried Wales to a record 12th successive Test win.
"It was one of those nip-and-tuck games of small margins," Jones told BBC Sport.
"We gave away far too many penalties and they beat us in the air."
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Adams' 78th-minute try came after he out-jumped England full-back Elliot Daly to claim a high ball, while Wales full-back Liam Williams' aerial dominance in defence kept the visitors at bay.
England conceded nine penalties to Wales' three.
Tight-head prop Kyle Sinckler, whom Wales coach Warren Gatland described as an "emotional time bomb" before the match, gave away two before being substituted in the 56th minute.
After the game, Gatland said Sinckler was a "fantastic" player with "a few demons to deal with".
Jnes responded: "I didn't know Warren had a degree in clinical psychology, so let me know and I might go and see him as well.
"We just felt it was the opportune time to make a change. Every time you make a change there's a number of factors involved. He was starting to get a little bit tired.
"I know you guys want to single him out because Warren said what he said, but don't be unfair to him. He's a young player on the way up. Look after him a bit."
However, Australian Jones said England's indiscipline cost them.
"The penalty count was against us and that gave them the opportunity to gain field position," he said.
"It was a tough game. I don't know whether we lost our heads but they put us under a lot of pressure. A few of our players were a bit off today and that happens.
"Full credit to Wales - they deserved the victory and played very well.
"It's all about ebb and flow. We had a fair bit of flow, but we'll come back for the Italian game. We didn't attack space well today and we will find a different way to attack Italy."
England play Italy at Twickenham on Saturday, 9 March following a rest weekend in the Six Nations. They may be without second row Courtney Lawes, who has a calf injury, and wing Jonny May, who will be monitored following a suspected concussion.
While their hopes of clean sweep of the tournament are gone, they could still claim the title with Wales still to negotiate a trip to Scotland followed by a home meeting with 2018 champions Ireland on the final weekend.
"We can still win the tournament and that is the objective of the tournament. Once you are in it you want to win it," said Jones.
'Plenty to work on'
England flanker Tom Curry scored England's only try with an opportunistic burst around the fringes in the first half, but was left disappointed despite making more tackles than anyone else in the match (24) and securing two turnovers.
"We gave everything and it's disappointing to come away with a loss like that, especially after putting ourselves in a good position in the first half," said the 20-year-old.
"There are plenty of areas we need to work on, but no one could fault our effort and it's a shame a few things didn't come out on the day.
"We will have rest now and come into the next camp focussed and be ready to fire into next week."
Former England centre Jeremy Guscott: "England lost through indiscipline. England's game has been built on accuracy, execution, being smart, playing in the opposition half, getting into their 22 and coming away with a try or three points.
"Today, balls were coming of the side of Owen Farrell's foot, Manu Tuilagi wasn't in the game, there was no building of momentum.
"The first half was good, but in the second they lost the plot - those errors and penalties just blew them out of the game.
"England's minds were just not set, they didn't get into gear for whatever reasons and they need to find out why."
Former England captain Martin Johnson: "They played so well in Ireland. We all thought they would reproduce that - but it doesn't just happen. You have to impose yourself, and do all the right things.
"They have got a very good kicking game, they can use that but you have to be able to play with the ball. I was worried last week as all they had to do was kick it to score.
"It's not that easy when you play good defences, and Wales are organised.
"England needed to take a grip and they couldn't. Wales were twice the team at the end that they were at the start. Everything was going their way, the crowd were into it - it was exactly what you don't want.
"As a good team, you need to be able to change mid-flow and change what you are doing, and they just couldn't do it."