Chrysis Michael earned the win for the Cypriots with a 42nd minute penalty after Danny Collins tripped Konstantinos Makridis.
"That was the worst international performance that I have ever witnessed," said Toshack.
"I was embarrassed by what I saw and I feel sorry for our fans for having to see that because they came out to Cyprus in numbers to support us.
"We tried something in the first half and it didn't work and then we changed after the break and it was even worse."