Jonelle Filigno got away with a clear shot on goal but straight at Karen Bardsley, after Melissa Tancredi wasn't penalised for a pull. With 12 minutes played, Filigno connected with a corner by the penalty spot and curled her shot into the top corner.
Jill Scott hit a first time effort from 25 yards but Erin McLeod caught the curling effort, then Kim Little went down in the box under a Desiree Scott tackle.
Alex Scott got a great cross over and Karen Carney's header just cleared the angle. But on 26 minutes a central free kick by Christine Sinclair went through the wall and doubled the Canadians lead.
Anita Asante made a crucial tackle early in the second half, filling in for Sophie Bradley, off for treatment of a bloody nose.
Tancredi forced her way into the box but Bardsley got down to her shot. Fara Williams came off the bench and got into the area but Jill Scott couldn't angle the header goalward.
After a good exchange between Houghton and Fara Williams, Aluko went down under a tackle in the box but appeals for a penalty were ignored.
Sinclair got away from Casey Stoney but only found Bardsley, when she had the chance to seal the win.
Rachel Williams and Rachel Yankey were thrown on in the last 10 minutes at a final attempt to spark a fightback.
A Houghton free kick ended up in a heap of players in the six-yard box and then Yankey's free kick was turned over by Carney but there was not even to be a consolation goal as Hope Powell's side's Olympics were over.
Team GB: Bardsley, A.Scott, J.Scott, S.Bradley (Yankey, 84), Houghton, Stoney, Carney, White (F.Williams, 63), Little (R.Willians, 81), Asante, Aluko
Unused Subs - Smith, Rafferty, Brown, Susi.
Canada: McLeod, Moscato, Wilkinson, Matheson, Sesselmann, Scott, Sinclair (Simko, 88), Schmidt (Parker, 77), Tancredi, Filigno (Kyle, 60), Nault.
Unused Subs - Leblanc, Stewart, Chapman, Booth
Pictured - Eni Aluko brought down by Rhian Wilkinson but there was no penalty and now way back for Team GB. (Photo: Gavin Ellis / TGSPHOTO.CO.UK)
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