West Ham United 1-1 Sheffield United (4-5 on pens)

Sheffield United reached the FA Cup semi-final last season, beating a number of top-flight sides on the way

Premier League West Ham were knocked out of the Capital One Cup at home as League One Sheffield United won on penalties to reach the third round.

The Hammers took the lead in the first half when Diafra Sakho headed in.

Sheffield United levelled when Winston Reid diverted a cross into his own net.

Neither side could find a winner in extra time and the game went to penalties, where Enner Valencia's spot-kick was saved and Michael Doyle converted to send the Blades through.

This was the first meeting of the two sides since Sheffield United were relegated from the Premier League in 2007, largely thanks to Carlos Tevez's goals keeping West Ham up instead.

However, it was later discovered Tevez's signing by the Hammers broke the rules on third-party ownership.

The Premier League fined West Ham £5.5m and, after the Sheffield club unsuccessfully appealed to be reinstated to the league with West Ham relegated, a two-year legal wrangle ended with an out-of-court settlement reported to be in excess of £20m paid as compensation to the Blades.

Sheffield United goalkeeper Mark Howard kept out Enner Valencia's spot-kick

For much of the first half the two sets of fans occupied themselves with baiting each other over that issue, with chances on the pitch few and far between.

Ecuador striker Valencia, making his first start for West Ham since joining from Mexican club Pachuca in a £12m deal, was particularly guilty of missing a number of opportunities.

He has been building up his fitness since his participation in this summer's World Cup and still lacks sharpness, spurning a great chance to open his account when he was put through by Mohamed Diame, only to shoot straight at United goalkeeper Mark Howard.

It was left to another new arrival at West Ham to open the scoring when Sakho flicked home a long ball into the box.

But the Blades were level in fortuitous circumstances midway through the second half when a cross eluded striker Marc McNulty and instead hit Reid to deflect into the net with goalkeeper Jussi Jaaskelainen wrong-footed.

Stewart Downing went close with a fierce strike for West Ham but chances dried up as the game drifted towards extra time and eventually penalties.

Both sides successfully scored their first four spot kicks but Valencia's effort was denied by Howard, allowing Blades skipper Doyle to step up and seal the win.

Sheffield United travel to Leyton Orient in the third round.

West Ham manager Sam Allardyce:

"We have lost on penalties at the end of the day.

"The fans know we should've won the game. We haven't been outplayed by Sheffield United, they made life difficult for us by playing that defensive unit. That is well within their rights when they come here.

"We opened them up time and time again with patient, good quality football, but at the end of the day the end product deserted us - in the main due to their goalkeeper."

Sheffield United manager Nigel Clough:

"Keeper Mark Howard has been in great form so far this season.

"We have made him number one and we are delighted - he is from down here and had family and friends here.

"It is the first time this season we have looked like a team. We are not close to where we want to be but this is positive."