Nelli Korovkina’s first-half goal was against the run of play, but England toiled with and without the ball and got worse as the match went on.
With England staring down an embarrassing early exit, second-half substitute Duggan struck in the third minute of injury time.
Hope Powell’s side must beat France – one of the tournament favourites – in their final Group C game on Thursday to have any chance of progressing to the last eight, with Russia under similar pressure against Spain, after France won the later match on Monday against the Spaniards.
Following their unexpected 3-2 loss to Spain, England really needed to win this match.
But, despite dominating possession and creating the lion’s share of opportunities, Powell’s side conceded against the run of play as Korovkina nodded home from close range after poor defending from England, a hallmark of their tournament so far.
Despite numerous chances – with goalkeeper Elvira Todua immense for the Russians and Ellen White missing a sitter – England faded badly in the second half.
Poor defending was an issue as always, while going forward, White was a blunt instrument up front.
While the supply was never truly good enough to warrant progress, Karen Carney’s fantastic cross should have been buried by Arsenal striker White, who somehow put wide from four yards.
That would have levelled the match on the hour mark, but Powell persisted with White, who was also poor in the first match.
As a result England continued to be toothless up front while, playing on the counter, Russia could have added to their lead as the excellent Elena Terekhova went close.
England huffed and puffed into the closing stages but never really looked like scoring until, at the start of injury time, sub Toni Duggan volleyed against the bar.
That sparked a frantic assault from England and, with time running out, Kelly Smith – also brought off the bench – found Everton’s Duggan, who flashed a rasping low finish past Todua to keep her side’s hopes alive.
WOMAN OF THE MATCH - Elena Terekhova (Russia): Bullied England at times, the hard-working forward combines invention and flair with her energy and was a superb outlet on the break.