England looked to be cruising to victory at Mt Smart Stadium after centre John Bateman crossing for their third try in the 67th minute for a 20-0 lead, before Tonga came roaring back with three tries in the last 10 minutes.
Tries to interchange forward Tevita Pangai Junior, hooker Siliva Havili and five-eighth Tui Lolohea and three conversions from prop Sio Siua Taukeiaho brought them within two points with two minutes to play.
Cheered on by their legion of fans among a capacity crowd of 30,003, Tonga threw everything at England in the dying stages but the match ended in controversy with star forward Andrew Fifita denied a match-winning try right on fulltime despite an England hand appearing to strip the ball from his grasp.
Earlier, first-half tries to Jermaine McGillvary and fullback Gareth Widdop helped England to a 12-0 lead at the break, with Widdop extending their advantage with a penalty goal nine minutes after the resumption before Bateman's crucial four-pointer.
The result ends Tonga's unbeaten run in their first semi-final appearance while England's win banished the demons from their heart-breaking semi-final exit at the hands of the Kiwis in 2013 to book their place in next week's tournament final against Australia in Brisbane.
The clash against the reigning champion Kangaroos will be England's first World cup final since 1995, while Australia will look to maintain their unbeaten run to retain the trophy they won at Old Trafford in 2013.
Kiwi league fans haven't seen anything like it in 22 years with the match boasting the biggest attendance for a rugby league game at the Penrose venue since the Warriors hosted Manly early in the club's inaugural 1995 season.
The stunning crowd support propelled Tonga to a strong start but the occasion appeared to get the better of the Kristian Woolf coached side with panicky play seeing them blow four first-half scoring chances and further poor execution and bad option looked to have ruined their hopes of staging a second-half comeback.
Wayne Bennett's tried and proven methods, absorbing long periods of pressure and limiting the impact of Tonga's star forwards Jason Taumalolo and Fifita.
England felt the brunt of some early punishment but poor Tongan defence from an attacking scrum allowed McGillvary to cross out wide after 10 minutes.
Controversy followed when Tonga were denied a reply with centre Michael Jennings penalised for passing off the ground, and England's ensuing set finished with the video referee overturning a no try call from referee Matt Cecchin for Widdop to claim their second to help extend the lead.
Tonga continued to hurt themselves by ruining three scoring chances in five minutes with back-rower Manu Ma'u throwing a loose pass on the first tackle before wing David Fusitu'a and Fifita both lost possession near the line.
England then applied the blowtorch but came up empty despite five promising raids in the final 10 minutes of the half, before an ill-timed grubber from Lolohea ruined Tonga's last opportunity before the break.
Tonga missed at least three more potential tries as the second-half wound down and their late charge ultimately fell agonisingly short.
