Fire trucks sprayed the plane carrying the squad with a red and green liquid, the colours of Portugal's flag, after it touched down at Portela airport as some 4,000 cheering supporters looked on according to police estimates.

The team, which lost 3-1 to hosts Germany on Saturday in the third-place playoff, then boarded a bus and were escorted by a police motorcade to the National Stadium just outside Lisbon where a celebration with live music was held in their honour.

Some 10,000 supporters, many wearing team jerseys, waved team flags and scarves while chanting "Por-tu-gal" and "Champions" when the Luiz Felipe Scolari's squad stepped on the pitch of the stadium.

"Be proud of this fourth place, be proud of your athletes, they gave their all. We're still going to grow more in the future and who knows the next time we will finish in second or even first," he said as the crowd chanted "stay! Stay! Stay!"

Scolari's contract with the Portuguese Football Federation runs out at the end of the month and has yet to be renewed although the coach has said he would like to stay on.

Portugal had only ever been to three World Cups before this year's finals and failed to get past the first round in two of them.

Their greatest triumph was making the semi-finals in 1966, where they lost to England 2-1 and went on to finish in third place.