The midfielder's studs crunched down on the Chelsea defender, leaving him in severe pain but fortunately without a serious injury.
Referee Michael Oliver did not take any action on the pitch but VAR reviewed the incident for some time from multiple angles.
They concluded it was not worthy of a sending off and Oliver did not check the on-pitch monitor to see the challenge himself.
Match of the Day 2 presenter Mark Chapman said he asked why a red card was not issued and he was told: 'It wasn't a clear and obvious error because VAR didn't feel there was anywhere else for him to put his foot.'
But later in the match, the officials in Stockley Park revealed that it was worthy of a red card and they made a mistake.
But many former players including Michael Owen, Ian Wright, John Hartson and Ray Parlour have since blasted the decision on social media.
Many criticised Michael Oliver for not looking at the monitor on the pitch to review the decision himself.
While others said Azpilicueta was lucky not to have been given a serious injury for the dangerous challenge.
It is the latest ruling by VAR to anger fans after Harry Maguire was not handed a red card against Chelsea on Monday.
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