A day after losing 1min 14sec to Luxembourg's Andy Schleck and 1:17 to Australian Cadel Evans when he got caught up in a crash 9km from the stage finish, Contador dropped more time on the 23 km team time trial.
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Norwegian Thor Hushovd took possession of the yellow jersey from Philippe Gilbert of Belgium when his Garmin-Cervelo team dominated the race against the clock in a time of 24min 48sec.
Contador's Saxo Bank team could only finish eighth at 28sec, leaving the Spanish all-rounder 75th overall at 1:42 adrift of Hushovd.
Reigning world champion Hushovd is not a contender for overall victory but Evans -- the runner-up in 2007 and 2008 -- is. He benefited from a strong display by his BMC team and now sits third overall at 01sec off the overall lead.
The Leopard-Trek team of Schleck, who has finished runner-up to Contador the past two years, were also strong, finishing just four seconds adrift to leave the Luxemburger 10th overall at 4s and 1:38 ahead of Contador.
'LONG WAY TO PARIS'
Contador admitted in a statement from Saxo Bank that he was out of contention, but with all the key mountain stages ahead he had not given up hope.
"My opponents are still ahead of me in the GC (general classification) and I might not even be the biggest favorite to win overall anymore, but there's a long way to Paris and we will do everything to gain time to get back," said Contador.
Given that most of Contador's team has been hand-picked to help pace him and counter attacks from rivals in the mountains, their result -- in an event which usually favours the peloton's big engines -- was not such a surprise.
Team manager Bjarne Riis insisted: "They did a great team time trial and finished in an impressive time. We entered the Tour de France with overall victory as the main objective and we will stick to our plan.
"Today, we demonstrated that we are able to ride as a team and we did an even greater time than I had hoped for."
Contador, who is fresh from winning the Giro d'Italia -- where Evans and Schleck did not compete -- said he is hoping to make up time in the mountains.
"I'm sure I'll get better every day because I have not the same preparations as the other favourites who have done the (Criterium du) Dauphine and the Tour of Switzerland," he aded.
"No matter what, throwing in the towel is the last thing I would do.
"Now there are riders who are better positioned than me... but I'll never give up. I'm looking forward to the mountains."
SCHLECK KEEPS OUT OF TROUBLE
Schleck, who rode for Riis at Saxo Bank last year, finished only 39secs behind Contador in Paris in 2010.
And the Luxemburger said that every day on the race would count.
"You can lose time in any stage of the Tour de France. We really paid attention to be at the front of the peloton yesterday, and so we kept out of trouble," said Schleck.
"But what happened to Alberto yesterday could happen to me tomorrow."
CONTADOR REITERATES INNOCENCE
Tour de France champion Alberto Contador reiterated his innocence and said he looked forward to resolving his "difficult" year as he lost more time to key rivals in the race on Sunday.
Contador is racing in spite of a pending decision from the Court of Arbitration for Sport (CAS), expected in August, which could ban him from the sport following a positive test for clenbuterol on the 2010 Tour.
The Spaniard, the race winner in 2007, 2009 and 2010, said he ingested the banned substance when he ate a contaminated steak -- a claim that was accepted by the Spanish cycling authorities, thus allowing him to race.
Despite a bumpy start, the Saxo Bank rider promised to fight on during the remaining 19 stages, he reiterated his innocence and said he looked forward to being cleared next month.
"This situation is not good for anybody, for me or the race. I'm the first person to want to see a resolution to this," Contador said.
"The experts know this is not about a case of doping. It's been a hard year for everyone, for my family and everyone connected with me. I hope it is resolved quickly, and I'm feeling optimistic."
