Sir Alex Ferguson insisted the Europa League quarter-finals are not beyond Manchester United despite conceding his team were fortunate to escape with a 3-2 defeat against Athletic Bilbao at Old Trafford.

United are facing the prospect of an early exit from a second European competition this season after being outplayed by an outstanding Bilbao side and subjected to a second successive home defeat in the Europa League. Marcelo Bielsa's visitors led 3-1 until injury time, when Wayne Rooney scored from the penalty spot, and would have won more comfortably but for a commanding performance from the United goalkeeper, David de Gea.

Oscar de Marcos was marginally offside when he converted Athletic's second goal and controversy surrounded the Basques' third after the German referee, Florian Meyer, penalised Patrice Evra for kicking the ball having lost his boot. Iker Muniain ultimately scored from the resulting free-kick. Even so, there were no complaints from Ferguson about the result and relief that the margin of defeat was not greater.

"There's no doubt Bilbao were the better side," he said. "They were very aggressive in their attacking and pressing, which is something we expected. The second goal was offside and I can't explain the third. The referee said you can't play without a boot but the real rule is you can but you have to go off the field so it seems a bit bizarre. It was unfortunate for us but Bilbao were the better team. Our keeper has made four or five terrific saves in the game, so it is really not the worst result for us.

"It's an uphill fight for us and the question is can we win the match next week? I think we can. We have to assess the games because we are finding it difficult marrying Thursday and Sundays, but I think we can win the game OK. We can win over there and we showed we can create chances, but we are going to have to defend better."

United players complained over Bilbao's decision to attack from the free-kick against Evra, appearing to suggest their opponents should have given the ball back, but Bielsa claimed there was confusion over the referee's decision. "Both parties are innocent," said the Athletic coach. "I don't know if there is a rule saying you can't play the ball without a boot on and certainly Evra wasn't aware of that. But at the same time we were not seeking to gain an advantage. It was an honest mistake. It was unfortunate."

Ferguson admitted he may gamble with his team selection against West Bromwich Albion in the Premier League on Sunday in order to enhance his side's prospects in Bilbao, principally with the fitness of Rio Ferdinand who was sorely missed in another poor European defensive display.

He said: "Rio's such a great, experienced player. I may gamble a couple on Sunday to prepare for Thursday's game. It depends on Chris Smalling. He had to go off to have stitches, but it's a possibility Rio could play next week. The defending was not very good, particularly in the second half. When we changed to three in midfield in the second half we started to get a grip but the second goal put us on the back foot again.

"Their system caused us problems, but when we went to three midfielders we got hold of the ball better and some of our attacking play was good, it was the defending that was loose. Bilbao's work ethic is fantastic. They worked harder than us and that's how he's built his side. He trained them for three hours yesterday and they still put that effort in tonight. It tells you everything."

On a separate note, Ferguson revealed he had been sent a letter by the Premier League asking him to stop talking about the vacant England manager's position and Harry Redknapp's prospects of getting the job. The letter is believed to have been sent to all clubs at the request of Tottenham Hotspur.

Ferguson said: "I've had a letter from the Premier League telling me to stop discussing the England manager's job. You can't believe it can you?"