DAVID O'Leary has admitted that Leeds' only realistic chance of qualifying for next season's Champions League is winning the competition this time around.

O'Leary has faith in the character, desire and ability of his players to gear themselves up again for the challenge of tomorrow's Champions League semi-final second leg away to Valencia.

But he acknowledges that their 2-1 defeat at Arsenal, amid a series of ugly incidents as bad feeling between the two sides spilled over, has probably now scuppered their chances of finishing in the top three.

While Arsenal are assured of at least finishing third, and probably second, Liverpool are in pole position to clinch the last Champions League place ahead of Leeds and Ipswich.

That means O'Leary's side are likely to need to overcome Valencia, and then Bayern Munich or Real Madrid in the final, in order to secure the financial riches and prestige of the competition again next season.

O'Leary admitted: ''For us to get into the Champions League again next season, we've got to win the Champions League this year.

''I always thought this was the game that could cost us. Highbury was the wrong place to be if you progressed through to the semi-finals.''

Although Leeds would lose out financially in the UEFA Cup rather than the Champions League, O'Leary again inferred that it could actually help their title bid next season.

''The Champions League is a fantastic thing to be in, but I do feel that we will be in contention for the league title next year,'' he added.

''If Liverpool are in the Champions League next season, they will realise just how hard it is to compete in both competitions at once as it is a league of its own.''

If Leeds do manage to win the Champions League but finish fourth or fifth in the Premiership, they would not only qualify for the premier competition as holders but also create a UEFA Cup place for the seventh-placed team.

O'Leary remains proud of the way his young team have reacted since the turn of the year to their problems in the first half of the season though.

On New Year's Day their 1-1 draw at home to Middlesbrough left them in 13th place, but the loss at Highbury was only their second league defeat since then.

''Arsenal were the better team. They were hungrier, stronger and first to the ball. That's as poorly as we've played for quite a while,'' conceded O'Leary.

''Since January, they've been lifting themselves and lifting themselves and playing brilliantly. But that was a below-par performance.

''I'm still proud of where they are in the league though, considering where they were. We've had to dig ourselves up.

''We got mugged by Liverpool in the FA Cup but started to get a few players back when we were in a terrible position in the league.

''That took guts and togetherness to give ourselves a chance of finishing in the top three. But you can't have as bad a start as we did and expect to get into the Champions League.''

O'Leary believes it is that never-say-die attitude which underpins his belief in his team being able to overcome Valencia tomorrow after a goalless draw in the first leg at Elland Road.

''They've done marvellously well this season and it'll stand them in such good stead for next season,'' he added.

''There's no bigger prize in football than getting to a European final. It's a cup final now, a one-off game.''

Fredrik Ljungberg gave Arsenal the lead on 17 minutes and the Gunners went further ahead through Sylvain Wiltord.

Leeds then pulled a goal back through Ian Harte's superb free-kick.

l Martin Keown risks having to miss the start of next season as the Football Association are set to ask their video advisory panel to investigate two controversial incidents involving the Arsenal defender.

Leeds manager David O'Leary has called for the panel of former managers, players and referees to recommend whether Keown should be charged with violent conduct.