Perth: India were Friday on the verge of setting Australia a big fourth innings run chase in the third Test at the WACA -- despite a poor second innings showing.
At tea the tourists were 245 for eight, an overall lead of 363 with just over two days to play, having led by 118 on the first innings.
VVS Laxman was again proving Australia's nemesis and was 57 not out, with RP Singh on seven.
The home side are aiming for a world record 17th straight Test win, but will have to produce one of the best run chases in the history of Test cricket to set a new mark.
Only four times has a side ever chased more to win a Test.
The previous best at the WACA is Australia's 342 for eight against India back in 1977, in the first Test between the two countries at the venue.
It was also India that snapped Australia's previous 16-Test winning streak, when they recorded a memorable victory after following on 274 runs behind at Kolkata in 2001.
India started the third day in control and leading by 170 runs with nine wickets in hand but lost four quick wickets before lunch as Australia fought back.
Nagging seamer Stuart Clark (3-42) started the Australian resurgence by dismissing Virender Sehwag.
The recalled opener was looking dangerous when he moved to 43, but missed a straight delivery that brushed his pads before crashing into the stumps.
India were 79 for two and speedster Brett Lee's renaissance continued when he claimed two vital wickets.
Lee (2-38) snared the prized scalp of Rahul Dravid, who feathered a catch through to wicketkeeper Adam Gilchrist on three.
Sachin Tendulkar and nightwatchman Irfan Pathan then steadied the innings, before Lee trapped the former LBW when he missed with an attempt to turn the ball off his pads on 13.
When Mitchell Johnson, who was expensive, had Sourav Ganguly caught at first slip for a duck, India had slumped to 125 for five, and had lost four wickets for just 46 runs.
Pathan and Laxman then saw the Indians through to lunch, but the nightwatchman's vigilant knock ended just after the resumption, caught by Ricky Ponting at first slip for a useful 46.
India were 160 for six, but Laxman and Mahendra Singh Dhoni (38) put on 75 before Dhoni tried to steer an Andrew Symonds off-spinner to fine leg, got a top edge and was caught by a diving Gilchrist.
Symonds then struck again in the same over, with Indian captain Anil Kumble caught by Hussey at first slip for a duck as India staggered to 235 for eight.
India resumed at 52 for one, an overnight lead of 170, after dismissing Australia for 212 on the second day.
Australia lead the four-match series 2-0 and have already retained the Border-Gavaskar Trophy.
Brief Scores (at tea, D-3):
India 330&245/8 (Laxman 57, Pathan 46, Sehwag 43; Clark 3 for 42, Lee 2 for 38) Vs Australia Ist innings 212.