Chasing 231 to win the fourth Test, openers David Warner and Chris Rogers took Australia to 30 for 0 at stumps on day three.
Melbourne: Australia were chasing 201 runs to win the fourth Ashes Test and take a 4-0 series lead after a stunning English batting collapse on a chaotic third day's play in Melbourne on Saturday.
Spinner Nathan Lyon and pacer Mitchell Johnson spearheaded a rousing Australian fightback after trailing by 51 runs on the first innings to skittle the tourists for 179 in 61 overs.
Lyon finished with 5 for 50 and claimed his 100th Test wicket, while man-of-the-series Johnson took 3 for 25 and now has 31 wickets in the series.
The Australians, needing 231 to win, reached stumps on 30 without losing a wicket with Chris Rogers on 18 and David Warner on 12. England suffered two batting collapses - losing three wickets for one run in the middle stages and their last five wickets for six runs.
Although the highest successful run chase at the MCG is England's 332 for 7 in 1928, since the current 'drop-in' pitch was first used at the ground in 1996 the highest successful fourth innings run chase since then is 183 by South Africa in 2008.
The Australians roared back into contention with a sensational bowling and fielding performance with Lyon and Johnson the heroes on a compelling day's cricket after they were all out for 204.
Alastair Cook (51) and Michael Carberry (12) gave the tourists a steady start with a 65-run opening stand, but once the openers were removed England crumbled losing their last eight wickets for 93 runs.
Johnson played a role in three of four dismissals to have the tourists tumbling to 87 for 4 in the middle session. Cook, who celebrated his 29th birthday on Christmas Day, became the youngest player to score 8,000 Test runs before he was trapped leg before wicket by Johnson.
Carberry went the same way to Peter Siddle for 12 off 81 balls before Joe Root was run out by a brilliant piece of fielding from Johnson. Root, on 15, scampered for a single only for Johnson to throw down his stumps at the bowler's end with the batsman well short of his ground.
Two balls later Ian Bell hit Lyon straight to the ever-present Johnson at mid-off for a first-ball duck. It just got worse for England with Ben Stokes caught off Lyon for 19 before Jonny Bairstow's dismissal triggered a stunning five-wicket tumble for six.
Bairstow was caught behind off Johnson for 21 before Lyon claimed Tim Bresnan and Stuart Broad for ducks in the space of three balls. England's big hope Kevin Pietersen, who top scored with 71 in the first innings, threatened for a time to build the tourists' lead beyond Australia's reach but on 49 he went after Lyon and was caught by Ryan Harris at long-off in the swirling wind and with him England's innings was quickly wrapped up.
Johnson trapped Monty Panesar leg before wicket and now is the first Australian bowler to take 30 wickets or more in a series in Australia since Craig McDermott in 1994/95.
Earlier in the day, Brad Haddin hit his fifth half-century of the series before becoming the last Australian wicket to fall for 65 off 68 balls. Haddin put on 40 useful runs for the 10th wicket with Lyon, who remained 18 not out off 34 balls.
Haddin, one of the heroes of Australia's Ashes-series victory, was finally out when he top-edged an attempted pull shot off James Anderson and was taken by wicketkeeper Bairstow.
The number seven batsman has scored 390 runs and is averaging 65 and ranks second only to David Warner (466 at 77.66) as the leading scorer in the series.
Anderson finished the best of England's bowlers with 4 for 67 off 20.2 overs. Broad captured 3 for 45. Australia already have clinched the Ashes with big wins in the opening three Tests in Brisbane, Adelaide and Perth.