Town once again experienced play-off woe with West Ham winning the second leg of the semi-final 2-0 at Portman Road and the tie 4-2 overall. The Hammers created the better chances and two goals in eleven second half minutes just after the hour from Bobby Zamora took the Londoners to the final.
As expected the Blues lined-up as they had finished the first leg at Upton Park, Matt Richards and Darren Currie replacing Drissa Diallo and Kevin Horlock, with Fabian Wilnis moving to his favoured right-back position.
Former Town loanee Marlon Harewood shot wide in the opening minute but, with the Portman Road crowd in fine voice, it was the Blues who were taking the game to the visitors in the early stages, Jim Magilton and Tommy Miler both having efforts blocked and Ian Westlake going wide after a corner had been cleared to him on the edge of the area.
Town's best chance of the half came in the 12th minute when a Wilnis throw-in was headed on by Jason De Vos to Darren Currie, but the former West Ham trainee angled his shot straight at keeper Jimmy Walker.
The Hammers' dangerman from the first leg, Matthew Etherington, made a strong run down the left two minutes later, cutting in and hitting a low drive which Kelvin Davis failed to hold, Richard Naylor clearing for a corner.
West Ham were starting to create chances and Bobby Zamora really should have done better with Chris Powell's left-wing cross, however, under pressure from Richard Naylor, he stroked the ball tamely to Davis.
Tommy Miller sent the ball well over from 20 yards in the 16th minute, prior to Richard Naylor heading a Currie corner wide.
On 25 Ian Westlake got his name in the book for a foul on Matthew Etherington, although the former Spurs player seemed to make an awful lot out of minimal contact.
Harewood shot over on the half hour after Zamora had flicked a freekick from the right into his path. West Ham came closest to opening the scoring in the 32nd minute when Anton Ferdinand's header from an Etherington corner flew narrowly wide.
Jimmy Walker, whose collision with Ferdinand caused Town's second goal at Upton Park, almost made another error in the 36th minute. Darren Currie's 25-yard strike seemed to bamboozle the former Walsall keeper and the squirmed out of his grasp but over the bar.
Just before the break, Kelvin Davis was flattened by Marlon Harewood and required treatment, referee Steve Dunn surprisingly failing to award a freekick or show a card for the late challenge on the keeper.
Both sets of fans applauded their sides in at the break with the half an even affair, the two teams each having enjoyed spells on top. Town had forced a number of corners which they hadn't managed to convert into serious opportunities, while the Hammers had had the better of the chances.
Nigel Reo-Coker hit the first effort of the second half, Kelvin Davis saving his 25 yarder. Soon after, Tommy Miller dispossessed Carl Fletcher not far outside the Hammers' area but screwed his shot wide.
Davis gathered Bobby Zamora's speculative long distance strike in the 55th minute, before Jim Magilton sent a 25-yard freekick just over Jimmy Walker's cross bar.
West Ham went ahead in the 61st minute, Marlon Harewood turning Matt Richards on the Town left and crossing low for Zamora who stabbed in from close range. Despite having a lot of possession up to the goal, the Blues had failed to carve out any real opportunities, while Harewood in particular had always been a danger.
The visitors' second goal came eleven minutes later from a trademark West Ham break. Harewood crossed from the right and Zamora volleyed past Davis.
Dean Bowditch took over from skipper Jim Magilton on 76, Darren Currie moving to the playmaker role in the middle of midfield and Bowditch joining the attack.
Currie almost set-up a goal for Bowditch within a minute, the former Brighton man sliding the England U19 in on goal. However, the ball became caught under his feet and rolled harmlessly out of play.
Kuqi got in the way of a Currie shot in the 79th minute but the 25-yard effort seemed to be going wide in any case.
On 85 Fabian Wilnis cut a low ball back from the right to Bowditch but the striker's shot was bundled out for a corner.
In injury time the largely anonymous Bent nodded a Richards cross wide, while Harewood got himself in the book for a needless dive when clashing with Kelvin Davis, the game almost erupting into fisticuffs.
A disappointing end to a season which promised so much. Back in February promotion was Town's to lose and lose it they did, the successive defeats to Watford, QPR and then Wigan proving costly more in terms of morale than points.
The Blues, who finished 12 points ahead of West Ham in the league table, were only occasionally at their best in the latter stages of the season, tiredness perhaps catching up with some of the older members of what is a relatively small playing squad.
Against West Ham, Town lacked ideas, with the strikers both having off-days and the midfield unable to find a way through the Hammers' backline either through passing around them or by searching for Kuqi's head.
The summer is likely to see changes at Portman Road with the club almost certain to want to cash-in on Darren Bent, the striker having only a year left on his contract.
Keeper Kelvin Davis has also been touted as a player who may be targeted by Premiership sides, while one or two of the older members of the squad may also depart, along with Pablo Couñago.
How Town progress next season will depend on what fees can be achieved for the likes of Bent, how well that money is spent and whether the likes of Dean Bowditch — and perhaps members of the FA Youth Cup-winning side — can progress towards becoming regulars in the first team.
Town: Davis, Wilnis, Richards, De Vos, Naylor, Magilton (Bowditch 76), Miller, Westlake, Currie, Kuqi, Bent. Unused: Price, Juan, Diallo, Horlock. Att: 30,010.