The Australians, with Adam Gilchrist and Michael Clarke leading the way, knocked off the 352-run target and then began whittling away at England's imposing first innings declaration of 551 for six.
At lunch on Monday , Australia were 417 for six, a deficit of 134, with Clarke unbeaten on 68 and Shane Warne not out 12 with a draw looming on a benign pitch.
Clarke scored his second half-century in two bats in the series, while Gilchrist cracked a typically rumbustious 64 before he was caught in the deep.
Gilchrist looked to have a century for the taking after picking up the tempo when he smashed spinner Ashley Giles straight to Ian Bell near the boundary rope some 40 minutes before lunch.
He looked in ominous touch until he lost concentration and lofted to the well-positioned Bell at deep mid-wicket.
Gilchrist clubbed eight boundaries off 79 balls and put on 98 runs with Clarke for the the sixth wicket in 112 minutes.
Clarke continued to bat stylishly and responsibly with his confidence growing after he was dropped in the wake of last year's Ashes series loss when he scored 352 runs at 37.22.
Gilchrist and Clarke safely reached the follow-on target just after first drinks and began carving into England's big total, which is likely to keep them safe from defeat over the final two days.
Gilchrist, who had a below-par Ashes series last year with just 181 runs at 22.62 with a highest score of 49, was tested outside his vulnerable off-stump by England pacemen Matthew Hoggard and Andrew Flintoff, but survived the initial examination.
England enjoyed great success bowling to a plan against Gilchrist in 2005, exposing a weakness playing outside off-stump and restricting the free-hitting wicketkeeper-bastman from playing his natural game.
Alastair Cook needed attention from the trainer after he took the full force of a fierce Gilchrist pull into his helmet fielding just metres away from the bat at short leg off spinner Giles.
Cook played on after drinks were taken.
Australia's 400 came up in 536 minutes off 119.3 overs for a quickening run-rate of 3.38.
England 551 for 6 decl Vs Australia 417 for 6 (Ricky Ponting 142, Michael Hussey 91, michael Clarke 68 n o, Adam Gilchrist 64; Hoggard 4 for 86)