Vettel should have moved 21 points ahead of Hamilton at the German Grand Prix, but will instead head to Hungary 17 points behind the Briton after his dramatic retirement at Hockenheim on Sunday.
The four-time champion crashed off in the slippery conditions, and, to make matters worse, his rival Hamilton sealed a famous victory from 14th on the grid.
“What an unbelievably dark day for Sebastian,” Rosberg said. “It was surely one of the darkest moments of his whole career.
“It was his home race, he had the chance in his hands to win and take a big lead in the championship, but he chucked it away in the wall.”
Vettel has been found wanting in the heat of his championship battle with Hamilton. His potentially title-deciding mistake on Sunday was his seventh high-profile error in a little more than 12 months. During the same period, Hamilton has not made a significant faux pas, and it is proving the difference between the two quadruple world champions.
Ferrari team principal Maurizio Arrivabene did not mention Vettel by name in Ferrari’s post-race press release.
The Italian team headed into Sunday’s race rocked by the news that their 66-year-old chairman Sergio Marchionne had been stood down from his role through illness.
“In what was a particularly fraught weekend for Ferrari, it would have been important for us to bring home the win,” Arrivabene said. Perhaps tellingly, he added: “Our car had shown it was up to the job.”
Vettel is paid £38million a year by Ferrari, but his mistakes are costing both himself and the team dearly.
Despite his demise, it still required all of Hamilton’s brilliance to claim the 66th win of his career.
“Never write off Lewis because he always comes back, and that is a fact,” added Rosberg, whose relationship with his former team-mate remains frosty.
“He showed it again on Sunday by taking home the win.”
Hamilton’s championship defence had been derailed by a mechanical failure in Austria before he was taken off by Kimi Raikkonen on the opening lap of the British Grand Prix a fortnight ago. His car then broke down in qualifying on Saturday.
“It’s too early in the season to ever really feel like it’s slipping away but it never feels good when you face adversity,” Hamilton said.
“It felt at one point, that, jeez, there was a steep hill for us, but the longer you endure it, the stronger you grow.
“I guess it is a crucial point in the season. It has been up and down, back and forth, but the mistake from Sebastian has been a benefit for us and Mercedes.”
Hamilton started only 14th after a mechanical failure in qualifying, but took the chequered flag at Hockenheim following a dramatic conclusion sparked by a rain shower, and Vettel’s jaw-dropping crash.
Both Hamilton’s Mercedes team-mate Valtteri Bottas and Ferrari’s Kimi Raikkonen pitted for new tyres after the safety car was deployed following Vettel’s costly accident.
Hamilton stayed on track to assume the lead, and when the race was back under way with 10 laps to run, the Englishman held off team-mate Bottas to seal a famous victory and afterwards thanked God for the win.
He said: “It is very difficult (to win) from that position and highly unlikely but you have always got to believe. I did a long prayer before the race and I wanted to stay collected and calm.
“I am so grateful. I kept pushing, kept believing and it happens. A big thanks to God.
“I hadn’t thought about the championship. It was so tough out there. Conditions were perfect because when it rained, I knew that I would be in a good position.”
Incredibly, the British driver is now 17 points ahead of Vettel after striking a devastating championship blow on his rival’s home turf.
Pole-sitter Vettel had been in control of his home race, and looked destined to increase his title advantage over Hamilton before a late rain shower ensured a spectacular end.
The Ferrari driver lost control of his car in the slippery stadium section towards the end of the lap, and slid across the gravel and into the tyre barriers.
Vettel was furious with his mistake, bashing both hands on the steering wheel. “F*** sake, f*** sake,” he yelled over the radio. “Sorry, guys. S***.”
The four-time champion got out of his Ferrari cockpit, and kicked the gravel in utter frustration.
To make matters even worse for Vettel, his potentially championship-deciding error, gifted the lead to Hamilton, who was running in fourth place.
Bottas and Raikkonen, both on older rubber, had to pit for new tyres, but Hamilton – despite being told to stop too, only before changing his mind at the last moment – stayed out on track.
The race resumed with just 10 laps to run, and Mercedes held their breath as Hamilton and Bottas went wheel-to-wheel for the victory.
But, at the team’s home race, Mercedes called off the fight: “Valtteri, this is James (Vowles – chief strategist). Please hold position.”
The Finnish driver duly obliged, and, despite the threat of a second rain shower, Hamilton crossed the line 4.5 seconds clear of his team-mate to move clear of Vettel in their battle for the championship.
Raikkonen completed the podium places, while Max Verstappen finished fourth ahead of the Renault of Nico Hulkenberg.
“Miracles do happen,” Hamilton’s race engineer Pete Bonnington said to the Brit after he took the win.
“What an amazing job from you guys,” Hamilton replied. “Thank you so much. Love conquers all.”
Plans to host a Formula One race in Miami next year have been scrapped, Press Association Sport understands.
Liberty Media, F1’s American owners, stated their intention to take the sport to downtown Miami in October of 2019 earlier this year.
But after Miami chiefs recently delayed a crucial vote until September, having been scheduled to take place on July 26, it is believed that F1 has decided to put the race on hold for at least 12 months.
Official confirmation of the delay is expected next week.
Liberty, the American conglomerate which purchased the sport for £6.4billion in January last year, is hopeful that the Miami race will still be given the green light for 2020, but doubts will be raised following the setback.
The proposed layout for the street circuit has already been changed, while some Miami residents have expressed their opposition due to the disruption the race will cause.
Liberty has made no secret of their desire to stage more races in America, with New York and Las Vegas also under consideration, and a deal to stage an event in Miami would have been the first struck in the post-Bernie Ecclestone era.
This week’s race at Hockenheim is the 11th of a record-equalling 21-race calendar, but its current deal is due to expire at the end of the season.
And the failure to cement a grand prix in Miami means the number of F1 races could drop to 20 next year.