At lunch-break, India were in dire straits having lost six wickets with just 190 runs on board. Mohammed Kaif with 18 and Irfan Pathan with two were holding fort for the Indians at break.
Earlier, England had made 393 in their first innings.
India could manage to score just 54 runs for the loss of five wickets in 26 overs in the morning session today.
The hosts, resuming at 136 for one with both Wasim Jaffer and Rahul Dravid going strong were rattled by Matthew Hoggard, who used the overcast conditions and the slight moisture on the wicket due to overnight rain to telling effect.
After Dravid survived a testing first over from the Yorkshire man, Jaffer began from where he left of yesterday punching Andrew Flintoff down the ground for the first four of the morning.
However, in Hoggard's third over, the paceman got one to nip back off the seam to rap Dravid on the pads. The ball seemed to be going down the leg side, but umpire Aleem Dar had no hesitation in raising his finger. The Indian captain went without adding anything to his overnight score of 40 with India at 140 for three.
Jaffer, after striking another beautiful boundary off Flintoff, played away from his body to a delivery in Hoggard's third over and the edge went to second slip, where Flintoff took a good low catch. Jaffer made 81 in 184 balls with 15 hits to the fence and the team score read 149 for three.
Hoggard got the next ball to reverse swing and it rapped Laxman on the pads after taking an inside edge, but the umpire raised his finger, pushing the Indians further back at 149 for 4.
Sachin Tendulkar, who began his innings with a leg side four off Flintoff along with Kaif, then started consolidating the innings and saw off Hoggard who in his morning spell bowled six overs and took three for six.
The two put on 27 runs for the fifth wicket when Monty Panesar struck the most important blow, with the left arm-spinner getting Tendulkar as his first Test wicket with a ball which came in with the arm and then straightened to wrap the great man on the pads, right in front of the wicket for 16, with India on 176 for for five.
Dhoni also left soon after making just five, edging a Flintoff delivery behind for wicketkeeper Geraint Jones to take the catch, with India at 183 for six and staring down the barrel.
Kaif, with a patient unbeaten 18 was the only Indian batsman who stood up to the hostile England bowling and like Collingwood, he too would have to bat along with the tailenders to take India close to the England total.