Iceland take on Croatia in their last Group D match in Rostov-on-Don on Wednesday at 4:00am AEST, knowing nothing but victory will suffice to see them through to the last 16.

"If we qualify from the group then Iceland will think we're going to be world champions because they are so optimistic!" Hallgrimsson told journalists.

"If we manage to qualify for the final 16 it will probably be the biggest success in the short Icelandic football history."

Croatia are top of Group D with six points from two matches and are guaranteed a place in the last 16 while Iceland are third, with just one point.

With a population of around 335,000 people, Iceland are the smallest nation ever to have played in the World Cup finals.

In 2016, the team stunned England 2-1 to reach the quarter-finals of their first-ever UEFA European Championship.