Chasing a revised target of 198 to keep the seven-match series alive, England were restricted to 178-8 from their 22 overs in a match badly affected by frequent rain showers in Bangalore.
England's reply started slowly, with Ravi Bopara going for a single, being superbly caught at mid-on by the diving Ishant Sharma off the bowling of Munaf Patel.
Ian Bell made 12 before being clean bowled by Harbhajan Singh as he aimed a slog to the leg side off the off-spinner.
It was 52-3 when Kevin Pietersen was bowled by the accurate Sharma, but Owais Shah and Andrew Flintoff raised hopes of an unlikely win with a fourth-wicket partnership of 88.
Shah smashed three sixes and nine four in making a superb 72 from just 48 balls faced, before he skied a catch to Sachin Tendulkar off Zaheer Khan.
Flintoff eventually departed for 41, made from 30 deliveries and including three fours and one massive six off Harhajan.
That signalled the end of England's victory hopes and they ended well short of the target needed to retain any hopes of a miraculous recovery in the series.
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Earlier, India made 166-4 from their rain-hit 22 overs, with opener Virender Sehwag leading the way with 69 from 57 deliveries.
Right-hander Sehwag smashed nine fours and three sixes, putting on 79 for the second wicket with Gautam Gambhir, who made a solid contribution with 40.
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Yuvraj Singh fired late on in belting an unbeaten 25 from a mere 11 balls faced, clearing the ropes with three huge sixes.
Yusuf Pathan ended the innings in style, smacking his only ball faced for a straight six off the left-arm spin of Samit Patel.