Montenegro sack coach Kranjcar
The result left Montenegro second in the group on 11 points from six games, six behind England who have played a game more and need a draw when they visit the Montenegrins on October 7 to seal a berth in next year's finals.
Third-placed Switzerland are three points adrift of Montenegro and play them at home in a potentially decisive final group match on October 11.
"The Montenegrin Football Association (FSCG) executive board has made a unanimous decision to relieve Kranjcar of his duties," the body's secretary general Momir Djurdjevac told a news conference.
"We were in a good position to win a play-off berth or even qualify automatically for the Euro 2012 finals and Kranjcar bears most of the blame for the team's slip-ups which have dealt a blow to our chances.
"I know many people will wonder whether sacking Kranjcar was the right thing to do because he made a great start but it was the only possible decision," said Djurdjevac.
FSCG President Dejan Savicevic added: "I feel sorry for Kranjcar and it wasn't easy for me to support his dismissal because I appointed him, but his commitment had deteriorated rapidly since February."
Montenegro won their opening three qualifiers against Wales, Bulgaria and Swizterland under Kranjcar, who took over from Zoran Filipovic in 2010.
Following the three 1-0 wins, the Montenegrins held England to a 0-0 stalemate at Wembley and drew 1-1 at home with Bulgaria before suffering their first competitive defeat under Kranjcar, who had steered his native Croatia to the 2006 World Cup.
Brnovic, who made six appearances for Yugoslavia and 21 for Serbia and Montenegro, faces a difficult task to keep alive Montenegro's hopes of qualifying for Euro 2012.
The tiny Adriatic republic, which gained independence from its state union with Serbia in 2006, are playing in only their second tournament as an independent nation, having won just one of their 10 matches in the 2010 World Cup qualifying.