RIO DE JANEIRO (Reuters) - New Zealand's hopes of becoming the first Olympic rugby sevens champions suffered a major setback on Tuesday when they lost their opening match to Japan and Sonny Bill Williams for the tournament to an Achilles injury.

The 14-12 defeat was one of biggest upsets in sevens rugby history and its impact on the All Blacks' campaign was compounded when Williams was forced off the pitch two minutes into the second half.

Williams, twice a World Cup winner in the 15-man game, sustained the injury charging into a tackle but immediately indicated to the bench that he needed help.

The New Zealand Olympic Committee later confirmed he would miss the rest of the tournament.

"He suffered a partial Achilles rupture of the left Achilles tendon," read a statement.

"He has been replaced by Sione Molia who is one of the New Zealand Olympic rugby sevens team's travelling reserves."

New Zealand could need yet another replacement after Joe Webber was taken off the pitch on a stretcher with a left shoulder injury soon after Williams.

Another World Cup winner in the longer format, Liam Messam, is on standby.

The Japanese, forward Lote Tuqiri said, got a "boost" in confidence from the departure of Williams as a large part of their gameplan had been about stopping the former rugby league international's trademark offload.

Japan are ranked 10th out of the 12 teams taking part in Rio but thoroughly deserved their first ever win over the All Blacks, who are seeded third.

In echoes of the victory of their team over South Africa at the Rugby World Cup last year, the Japanese showed no deference to the superpower of the international game.

"It's unbelievable," said Japan back Lomano Lemeki. "You've got to think that a minnow team can come here and beat a team that's supposed to be a gold medal contender. It's still pretty unbelievable and I am just shocked to be honest."

Teruya Goto and Kameli Soejima scored the tries for Japan and, crucially, Lemeki and Katsuyuki Sakai slotted the conversions. That gave them the two-point lead they managed to hold on to for a famous victory, despite some desperate All Blacks attacks in the final couple of minutes.

New Zealand can still qualify for the quarter-finals from Pool C with two matches remaining but the defeat is likely to make their path through the knockout stages harder. Their veteran coach Gordon Tietjins walked off the pitch stoney-faced and he and the All Blacks players went straight past media into a meeting.