By Sarah Young

LONDON (Reuters) - Italy battled past Hungary and Croatia disposed of the U.S. to join Montenegro and Serbia in the men's water polo semi-finals, which will feature neither of the Beijing gold and silver medalists after a thrilling quarter-finals round.

Montenegro will play Balkan neighbor Croatia on Friday, and Serbia face Italy, in a semi-final line-up that reflects a tournament that been dominated by the countries of the former Yugoslavia.

Italy advanced to the semi-finals after a defining moment for water polo at the Games, as they unseated mighty Hungary from a 12-year, three gold-medal reign on the Olympic throne with an 11-9 victory, in a match high on meaning, drama and last minute shots.

Croatia made light work of the U.S. team in the final match of the evening, beating the 2008 runners-up 8-2, after a brilliant defensive performance which proved too strong for the Americans to crack.

"Tonight, we played defense, amazing, so aggressively. Our goalkeeper was brilliant," Croatia's Niksa Dobud said. "I expected that we'd go to the semis if we played like this."

The U.S. exit at this stage of the competition was hard to stomach for a group which were so intent on winning a medal they sacrificed a season of professional wages.

"It's just our shots weren't falling today and sometimes that's how it goes. You hope it's not in the quarter-finals of the Olympics, but sometimes that's how it happens," centre forward Ryan Bailey said.

The American Olympic campaign started off well with a win over Montenegro but the experienced team rarely looked at ease in later matches.

"We never found that rhythm again, never quite found that belief, maybe, in ourselves," U.S. coach Terry Schroeder said.

UNSTOPPABLE

Croatia and Italy both reach the semi-final stages of the tournament for the first time since 1996, when they went on to win silver and bronze respectively, while Montenegro and Serbia are old hands and featured in the semis in both 2008 and 2004.

"When we play as a team and we respect our systems and play with discipline the score takes care of itself. I just hope that we can play like this all the way to the end," Italy's Pietro Figlioli, who scored a hat-trick, said.

He added that defeating the Olympic champions gave him a feeling of "personal satisfaction", and said he believed the team were "unstoppable" when they play together like they did against Hungary.

Gold-medal favorites Serbia were also part of the drama earlier on Wednesday, when they were almost upset by lower-ranked Australia, before they staged a decisive turnaround in the second half to beat Australia 11-8.

Montenegro overcame Spain 11-9 in their quarter final to give their country a shot at winning their first Olympic medal as an independent nation.

The former Yugoslav nations of Montenegro, Serbia and Croatia all play a similar style of water polo which has helped them power ahead of their rivals at this year's Games.

(Editing by Alison Williams)