We are playing very badly, says Real Madrid coach Carlo Ancelotti

Madrid: Real Madrid coach Carlo Ancelotti did not mince his words after the Champions League holders managed to get past Schalke 04 into the quarter-finals by the skin of their teeth on Tuesday and were whistled off the pitch.

Real slumped to a stunning 4-3 home reverse to the battling Bundesliga side, who came within a goal of pulling off a remarkable upset after losing last month's first leg in Gelsenkirchen 2-0.

"There are problems across the board," the Italian told a news conference. "In attack, in defence, in a lack of fight, motivation and concentration," he added.

"It is not good for our image and that of the club. The whistles were totally justified.

"We have to work harder and focus more. We have to have more of everything."

It was the latest poor performance from Ancelotti's expensively-assembled team, who surrendered top spot in La Liga to Barcelona when they were beaten 1-0 at Athletic Bilbao at the weekend, and their first home defeat in Europe's elite club competition since April 2011.

In recent weeks, Real have been a shadow of the side that romped to a Spanish record 22 straight wins at the end of last year and Ancelotti said Tuesday's showing confirmed the team were playing "very badly".

Real have little time to set things right with a trip to Barca for the La Liga 'Clasico' looming on March 22.

Barca's front three of Lionel Messi, Neymar and Luis Suarez have been in prolific form since the turn of the year, while Real's forwards Cristiano Ronaldo, Karim Benzema and Gareth Bale have gone off the boil.

Ronaldo did score twice on Tuesday, taking his tally in European competition to a record 78 goals, but it did not mask what was a generally disappointing showing from the team.

One bright spot was the return from a long-term injury of Luka Modric, who came on as a second-half substitute.

Real have missed the control he gives them in central midfield and he was given a huge ovation when he replaced the ineffective Sami Khedira.

"He will give us more control of the ball, so we are more effective," Ancelotti said.

"We can't demand too much of him, we have to take things slowly. He played well for 30 minutes and he will help us."