England initially struggled to settle after Sarina Wiegman made nine changes to the side that beat South Korea, including a first start for Katie Robinson, who set up her side’s first goal.
Italy responded through Sofia Cantore after the restart before Daly – in another successful audition for the England number nine role – netted the winner.
The 32,128-strong crowd broke a Coventry Building Society Arena attendance record for a major sporting event in the stadium, previously set in a rugby union meeting between Wasps and Leicester.
The Italians, ranked 17th in the world, tested Ellie Roebuck early on when Everton’s Aurora Galli picked out Valentina Giacinti, who forced a low diving save from the England goalkeeper, while at the other end Daly was twice denied by Laura Giuliani.
Jessica Park skied a long-range effort as England at times struggled to settle into a comfortable rhythm, Robinson missing a touch down the right wing.
Maya Le Tissier watched a long-range attempt sail well over the bar before Park dispossessed Italy and drove down the left, looking visibly frustrated when there was no one available to feed.
The hosts were still searching for an opener when Alex Greenwood, wearing the captain’s armband, outsprinted Giacinti to the ball to prevent the Roma forward finding herself in a dangerous one-on-one with Roebuck.
England finally took the lead after 33 minutes when Robinson sent in a well-placed cross from the right edge of the the area for Daly who, sandwiched between two centre-backs at the edge of the six-yard box, nodded into the right corner for her 12th goal in an England shirt.
As Italy pushed for an equaliser, Barbara Bonansea tried to feed Giacinti on an aggressive run into the area, but the largely untested Roebuck halted the visitors’ momentum when she came off her line to collect.
England began the second half brightly as substitute Katie Zelem sent a long pass to Robinson, who fizzed the ball in the direction of Daly, who could not poke past Giuliani.
Italian substitute Elena Linari was agile to clear Jordan Nobbs’ attempt off the line, but the ball fell again to the Aston Villa midfielder, on in place of Park, who forced a simple stop from the keeper.
The visitors levelled after 62 minutes when Cantore rose to meet Bonansea’s cross and headed home, Roebuck getting her fingertips on the ball but unable to keep it out at the near post.
The equaliser was not without controversy after the ball appeared to cross the byline in the build-up as Bonansea battled Le Tissier in the left corner. Without goal-line technology in the tournament, however, the effort stood.
But Daly restored England’s lead when, having initially headed wide from six yards out, she found herself unmarked inside the area, rose to meet Lauren James’ cross and, with an elegant mid-air pivot, directed the ball into the bottom left corner.
Italy threatened, but England survived five minutes of added time to take all three points.
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