Thompson had moved into a two shot lead after three rounds, after posting a five-under par 67 yesterday at the Mission Hills Country Club.

She was at 13-under par heading into today's final round at the first major of the year.

However, it was noticed by a television viewer that she had incorrectly replaced a marked ball in her third round.

Thompson placed the marker to the side of her ball on the 17th green before lifting it and placing it back in a different position.

As a result she was handed a two-stroke penalty and an additional two shots were docked for producing an incorrect scorecard in round three.

Her third round 67 was changed to a 71 as she bid to regain the title she won in 2014.

Thompson was leading the field by two shots when she was informed of her score change, but went on to post birdies on three of the last six holes to force the play-off.

She joined Ryu on 14-under but the Korean triumphed in the play-off after she birdied the opening hole.

"It is unfortunate with what happened, I did not mean that at all, I had no idea that I did it," Thompson said to the Golf Channel.

"I had to regroup myself, my caddie helped me out tremendously, we have a great relationship.

"But it's all to the fans, they helped me get through the rest of the round and I thank them a lot.

"I wasn't expecting what happened today to happen and I will learn from it."

Thompson was one-stroke behind Ryu as she made her way to the 18th and narrowly missed an eagle putt which would have seen her claim the title.

Ryu secured her second major victory after winning the US Open in 2011. 

Suzann Pettersen finished third with Australia's Minjee Lee and Inbee Park of South Korea, on 13-under.

Michelle Wie of the United States took sixth place on 11-under, while New Zealand's world number one Lydia Ko was tied 11th on seven-under as her reign as champion ended.