Croatia, who made it to the last four of the 2018 and 2022 tournaments, were looking to bounce back after their opening Group L match, a 4-2 defeat to England in Dallas.

In the end, Ante Budimir's 54th minute goal proved enough to see off the spirited Central Americans.

Croatia's most celebrated player, Luka Modric, was making his 200th international appearance, but his early headed effort on goal sailed over the bar.

Under Danish-born coach Thomas Christiansen, Panama have implemented a tight defensive structure that helped them secure their second-ever World Cup appearance.

But it was the Panamanian offence that almost made the difference in the first half.

In the 23rd minute Jose Luis Rodriguez guided a header towards goal but the outstretched fingertips of Croatian 'keeper Dominik Livakovic redirected the ball off the bar.

The second half marked a clear momentum shift and the capacity crowd of 43,000 in Toronto with a strong Croatian majority erupted when Budimir tapped in a cross from Josip Stanisic.

Croatia should have been two up minutes later, when a perfectly weighted pass from Modric sent Marco Pasalic alone speeding towards goal.

Pasalic's first effort was stopped by keeper Orlando Mosquera and although the rebound came back to him he blasted an off-balance second attempt well over the bar.

Panama kept pressing for the equalizer but they ultimately failed to find the net, extending their World Cup goalless streak.

They face England in what will be their final match of the tournament on Friday.

Croatia have three points and will face Ghana, who moved onto four points after holding England to a goalless draw earlier, for a place in the final 32.

The victory was a sweet finale on a special night for 40-year-old Croatia midfield maestro Luka Modric, who made his 200th international appearance and was thrown in the air by his teammates to mark the achievement at the end of the match.

Subscribe to beIN SPORTS!