Collingwood amassed 206 and with Kevin Pietersen (158) shared in resurgent England's highest fourth-wicket partnership in Ashes Tests of 310 to place the tourists in an impregnable position with three days left.
Andrew Flintoff declared England's marathon 11-hour 47-minute innings at 551 for six with nine overs left and cashed in with the wicket of Justin Langer for four to have the Australians on the back-foot.
Langer was caught by Pietersen in the gully after Flintoff elected to bowl with the new-ball in the second over instead of Steve Harmison.
At stumps, Australia were 28 for one with Matthew Hayden not out 12 and Ricky Ponting on 11.
Pietersen earlier underlined his danger series value to the ageing Australian attack with his second dominating century in the last three Ashes Tests.
England's marathon innings kept the weary Australians in the field for close to two days in the search for enough runs to give their bowlers the chance of taking 20 wickets and levelling the series after the 277-run loss in Brisbane.
Collingwood's 516-minute epic put him alongside Reg Foster and Wally Hammond as the only Englishmen to have scored a double century in Australia.
The Durham right-hander, who wasn't sure of his place in the team until Marcus Trescothick returned home with depression, was out in the final over before tea, caught behind attempting to drive Stuart Clark.
Collingwood's restrained double-century off 392 balls was the first by an England batsman in Australia since Hammond's 231 in Sydney in 1936.
The records kept tumbling with Collingwood-Pietersen's 354-minute stand bettering the 288 by Nasser Hussain and Graham Thorpe at Edgbaston in 1997 as the highest England fourth-wicket partnership in Ashes cricket.
It was Collingwood's third Test century and first against Australia and followed the heartbreak of getting dismissed for 96 in the second innings of the first Brisbane Test.
He scored 134 not out against India in the first Test at Nagpur last March and 186 against Pakistan at Lord's in July.
Pietersen equalled his 158 in the drawn-out 2005 fifth Ashes Test at The Oval before he was run out by Ponting at short mid-wicket going for a quick single.
The Hampshire dominator clouted a six off Shane Warne, clubbed Glenn McGrath for three fours in one over and raised his hundred with a scampering single off Clark before lunch.
He ran down the field holding his bat and helmet aloft in jubilation before a warm embrace from Collingwood on attaining his sixth century in his 20th Test.
Flintoff (38 not out) and Ashley Giles (27 not out) put on 60 runs before the skipper made the declaration immediately after passing 550.
It was a demoralising day for Australia's two great bowlers, Warne and McGrath, first and third all-time leading Test wicket-takers.
Warne was heading for his worst Test drubbing before he claimed his only wicket of the innings after conceding 145 runs. He finished the day with 1-167 off 53 overs.
It was Warne's worst Test return in an Ashes Test against England and was close to his all-time low of 0-147 against India in Calcutta in 1998.
An exasperated Warne even resorted to bowling outside leg-stump in an attempt to entice Pietersen to get himself out to a rash shot, to no avail.
McGrath, heaved for six by Flintoff over square leg late in the day, claimed the unwanted milestone of going for 100 runs for the first time in 121 Tests with 0-107 off 30 overs.
First-change Clark was by far the best-performed bowler with 3-75 off 34 overs.
England 551 for 6 decl (Paul Collingwood 206, Kevin Pietersen 158, Ian Bell 60 Andrew Flintoff 38 n o; Stuart Clark 3 for 70, Warne 1 for 169) Vs Australia 28 for 1(Matthew Hayden12 n o, Ricky Ponting 11 n o; Flintoff 1 for 14)