Bell scored 74 before Muralitharan breached his defences

The pair resisted for 44 overs before Muttiah Muralitharan struck after tea to set up an 88-run win for the hosts.

"Belly and Matty Prior's partnership was exceptional in the middle period but full credit to Sri Lanka, they fought right to the end," said Vaughan.

"There's a lot of real positives we can take out of the Test match."

Interview: England captain Michael Vaughan

Interview: England batsman Ian Bell

Vaughan said it was always going to be a "really tough ask" for England to bat out the final day in Kandy.

Resuming on 9-1, England lost four wickets in the morning session before Bell and Prior's defiance gave the visitors hope they could avoid defeat.

However, once they fell to Muralitharan defeat seemed inevitable and the end came when Lasith Malinga ripped a yorker through Matthew Hoggard's defences with less then half an hour of light remaining.

606: DEBATE Great game, let's hope the rest of the series lives up to it HQ

"When we lost early wickets this morning it made it more difficult but the partnership of Belly and Matty Prior got us back into it," said Vaughan.

"Towards the end we thought we were going to get over the line but Lasith Malinga produced a great delivery to get rid of Hoggard."

The three-Test series now moves to Colombo and Vaughan insisted his side would not be downhearted going into the second Test on Sunday.

"We take a lot of positives to Colombo. Obviously we're 1-0 down and we'll have to fight back hard to make sure we make it 1-1 in Colombo," said the England captain.

England wicket-keeper Prior, who made a defiant 63, echoed his captain's positive tone.

"Vaughny this morning asked us to fight and that's what we did," said Prior.