Wing David Strettle made a surge for the line but the video evidence of him grounding the ball was inconclusive.
Wales' victory handed them a second Triple Crown in five years and they are now two wins away from a third Grand Slam in eight years.
But Lancaster admits that for England it is performances rather than results which matter the most.
"I'm disappointed with the result but very proud of my players," he said.
"The players are hurting now, which shows how much they care, but they did the Red Rose proud.
"Wales are a team who have been together a long time and we have been together for three weeks."
"They are a very good defensive side and we caused them problems."
Had Strettle been awarded a try in extra time it would have given replacement fly-half Toby Flood a touchline conversion to draw the game.
By that stage Lancaster was unable to watch the replays of the potentially result-changing decision.
"It was far away from us. I stopped looking because it was not my decision. I couldn't control it," he said.
"There are lots of lessons we can learn but games at this level are going to be won by very fine margins.
"It's up to us to learn those lessons and move on and that's part of team development.
"The intensity and the pressure of the situation and the inexperience in the squad were all things to test us but we played with credit and did the Rose proud.
"After the first 15 minutes where we defended a lot again, I thought we got better set-piece ball and that gave us a chance to play and we played with tempo."