Rome, Italy, 13 May 2016 | AAP

Nick Kyrgios has lost his Italian Open third-round clash with seven-time champion Rafael Nadal 6-7(3) 6-2 6-4 in an absorbing three-hour contest in Rome.

The 21-year-old, who famously beat Nadal at Wimbledon in their only previous meeting in 2014, took the first set after winning the tiebreak 7-3 having saved set point at 4-5 down.

The clay court legend hit back in the second set, breaking the Australian to love in the opening game and did so again en route to a 5-1 lead before levelling the match on serve. 

Kyrgios received treatment for a hip injury from the courtside trainer but said it was no excuse for his defeat, as Nadal saw out the match to set up a quarterfinal clash with world No.1 Novak Djokovic.

“My hip was not great before the match either, but I knew my game plan and I knew I was going to try and play aggressive,” said Kyrgios.

“It’s bothering me but it didn’t really bother me too much at all.

“I mean, he just .. couple points here and there, it was tight and he just played well in the big points. That’s pretty much it.”

Despite the defeat, Kyrgios said he was pleased with the way he performed against the man who has won this title seven times.

“Obviously he’s the greatest of all time on this surface,” he said.

“For me, just when I was a bit younger .. we were always talking about playing Rafa on clay, and I always thought I’d get absolutely destroyed against him.

“Then to play him and compete out there, deep in the third, [a] three-hour match, it feels pretty good.”

Kyrgios is projected to rise to a new career-high rank of No.19 next week, ensuring he will be seeded for the French Open which starts in two weeks.