BEIJING China's defending Olympic champion Zhang Ning won gold in the women's badminton singles Saturday, pulling off a stunning upset over world number one and compatriot Xie Xingfang.

Zhang, the veteran of the Chinese team, won a gripping match over hot gold medal favourite Xie 21-12, 10-21, 21-18 in front of a packed chanting crowd and watched by millions throughout China.

Zhang, who crouched on the court in tears after the match, said she started to doubt 100 days before the Games that she could win a medal after swelling in her knee refused to go down.

Even after Athens, when she won gold at 29, Zhang, whose injured right knee was strapped during the match, thought she was too old for elite badminton, and had not even considered playing in Beijing.

'After the Athens Games I didn't think about participating in the Beijing Games especially during the last two years,' the second seed said.

'I wasn't doing very well, and I was kind of confused, I didn't know what to do, but then I persevered, I tried very hard, I did a lot of training so this gold didn't come very easy,' she said.

'I did a lot and paid a lot for this gold.

'I'm 33-years-old and I made it to the finals in this Beijing Games, I believe it was tenacity that got me this gold medal.'

Underdog Maria Kristin Yulianti of Indonesia took bronze after she defeated China's third seed Lun Lan.

The victory leaves China with two golds at this tournament after taking the women's doubles title on Friday, and keeps alive their ambitions of clinching all five, topping their tally of three in Athens.

The loss was heartbreak for top seed Xie, 27, competing at her first Olympics after being left out of the China team in Athens.

Fans had been hoping for a golden double from Xie and her boyfriend, fellow world number one Lin Dan, who fights for gold against Malaysia's second seed Lee Chong Wei on Sunday in the men's singles final.

'Since I didn't get the gold medal I'm still a bit upset and I just hope that tomorrow Lin Dan will be able to beat Lee Chong Wei,' the silver medallist said, refusing to comment on her future plans with Lin.

'I'm not thinking about London (Olympics) now, it's hard to imagine if I will participate,' she also said.

Xie, a two-time world champion, hinted before the Games of retirement after Beijing, saying she wanted a life with Lin other than training and competition.

Zhang, playing at her last Olympics, silenced critics who questioned her inclusion in the team at the expense of world champion Zhu Lin after she slipped to seven in the world rankings through injury.

Zhang took the first game at a canter with a mix of craft and aggression, but Xie came charging back in the second with precision shots as errors started to creep into the veteran's game.

In the decider, Zhang took a 3-0 lead and kept edging ahead, showing steely determination with her shots, that formed part of numerous lengthy rallies, and pumping her fist in the air with every winning point.

But Xie refused to throw in the towel, grinding down her team-mate to level at 15-15.

The exhausted pair matched point for point before Zhang pulled ahead 20-17. Xie saved one match point but not the second.