Craig Shakespeare accused referee Jonas Eriksson of endangering Leicester’s Champions League dream after Antoine Griezmann’s controversial penalty.
Swedish ref Eriksson awarded a spot-kick for Marc Albrighton’s foul on Griezmann on the edge of the box.
Dangerman Griezmann stepped up to emphatically bury the spot-kick in the 28 minute for his 24 goal this season. It leaves the tie delicately poised ahead of the second leg on Tuesday at the King Power Stadium.
But City were furious as Foxes skipper and keeper Kasper Schmeichel protested at half-time and Shakespeare after full time.
Shakespeare fumed: “It wasn’t a penalty, it was a free-kick. I told the referee he got the decision wrong.
“You are talking about a Champions League quarter-final. This major decision might cost us the game.
“I think it is a disappointing moment, a key moment.
“The referee has to get that one right. You can’t guess. It is a definite free-kick but outside the box.”
Keeper and captain Schmeichel added: “The penalty has ruined our game plan. It is tough to take when it is so clear.
“We should have had something from this but we have to accept it. They might have scored from what should have been a free-kick but it is easier to score from a penalty.”
The hosts dominated possession and resolute Leicester did not have a shot on target as they defended with their lives.
Defender Robert Huth was booked in the second half and now misses Tuesday’s return leg.
The visitors also had sports scientist Tom Joel sent to the stands for handing out an energy sachet to Albrighton infront of the home dug-out amid stormy scenes.
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Shakespeare hopes regular captain Wes Morgan, missing with a back injury, could potentially be fit to replace Huth on Tuesday.
He added: “We need him ready. Wes is taking more time than he thought and we thought.”
Atletico boss Diego Simeone praised striker and match-winner Griezmann, a target for Chelsea and Manchester United.
Simeone said: “He’s a fabulous player, he’s a complete player, you don’t know what position he plays anymore. He has taken responsibility.”