KAUNAS, Lithuania (AFP) - Rangers manager Walter Smith says his team needs to drastically improve after the Scottish side crashed out of the Champions League at the hands of FBK Kaunas on Tuesday.

The Lithuanian minnows clinched a 2-1 aggregate win in their second qualifying round tie.

It means the Ibrox club, who played 19 matches to reach the UEFA Cup final last season, are out of European competition after just two games.

Rangers open their Scottish Premier League campaign away to Falkirk on Saturday and Smith says his team must do better if they are to avoid last season's heartache of losing out to arch-rivals Celtic in the title race on the final day.

He said: "We haven't started the season well at all. It's disappointing that we haven't reached any sort of level. We haven't reached the right level so far this season.

"I think everyone who is involved with the club is extremely disappointed at what has happened so far.

"It's a reasonable excuse to use that the effects of last season are still with the players but I don't think it is a relevant one.

"It seems fairly ridiculous that you can reach a European final and then get knocked out at the first game of the next season but that's the way it has happened.

"If it had been last season and you lose out in the first game because it is a new team that has been put together then fine. You would have said to yourself that it was something you could have expected.

"But we have been a year into it now and we are a reasonably experienced team and we never really handled either game particularly well."

On Tuesday FBK Kaunas knocked Rangers out of the Champions League after clinching a shock 2-1 win in Lithuania.

The home side sealed their place in the next round with a late goal from Linas Pilibaitis.

Following a scoreless first leg at Ibrox last week Rangers had taken the lead in the 32nd minute with a vital away goal from midfielder Kevin Thomson after some fine wing work by Nacho Novo.

The Spaniard showed great strength and determination to fend off defender Nerijus Radzius and pick out Thomson in the box, who slotted the ball home through the keeper's legs.

Kaunas equalised two minutes from half-time with a magnificent free-kick from their captain Radzius who slammed home the ball from 35 yards out.

Kaunas looked more organised at the start of the second half and soon had a chance to take the lead when Marius Cinikas' shot from the edge of the box smashed off the crossbar. Allan McGregor was the busiest man on the pitch at this time and the Rangers keeper had to be at his best to save a downward header from Adrian Mrowiec in the 59th minute.

Substitute Andrius Velicka had a great chance to win it for Rangers in the 80th minute but his shot was well over the bar.

But it was to be Kaunas' night and Linas Pilbaitis sent the home fans wild when his header from a corner somehow made its way into the Rangers net past McGregor and a defender on the line with four minutes to go.