Mitchell Johnson's devastating spell of four wickets for seven runs did the principal damage as England were bowled out for only 187 at the WACA.
Johnson (six for 38) undermined England's ambitions of retaining the Ashes in this third Test with a supreme exhibition of late swing and left-arm pace.
Only Ian Bell (53), still batting down at number six on his way to his fourth successive Test half-century, could withstand Johnson for long as England conceded a first-innings deficit of 81 by tea
on day two.
Australia then sought to consolidate their advantage but lost opener Phil Hughes and captain Ricky Ponting cheaply to Steven Finn to leave them at 34 for two.
Vice-captain Michael Clarke was next to go as he chopped a Chris Tremlett delivery onto his stumps with the score at 64 for three, but the hosts
suffered no further losses, with opener Shane Watson reaching his half-century, to close the day in a dominant position on 119 for three, 200 runs ahead.
Johnson's intervention came in the nick of time for Australia, England losing all 10 wickets in only 38 overs - after progressing serenely to 78 without loss on another sunny morning.
He broke the opening stand when Alastair Cook fell for his first score under 50 so far in the series, a push-drive sliding off the face of the bat low to gully.
After Johnson's next over from the Prindiville Stand end, Jonathan Trott and Kevin Pietersen were also gone - for four runs between them.
Devilish inswing accounted for two lbws as both batsmen shaped to drive.
Pietersen, who had made a man-of-the-match and career-best 227 in England's innings victory at Adelaide two weeks ago, went for a third-ball duck this time.
He chanced a DRS review, but that confirmed Johnson was too good for him on this occasion.
Australia's mercurial match-winner therefore continued to justify his recall, the native Queenslander having made a defiant half-century yesterday on what is now his home ground.
It did not seem Australia, needing to avoid defeat here to stop England taking an unassailable 2-0 lead, could afford to miss any opportunities today.
But they did so when Andrew Strauss (52) edged Ryan Harris between a static wicketkeeper and first slip for four when he had just 16.
The England captain played and missed several times but also counted eight boundaries in a 95-ball half-century.
With Johnson in full cry, Harris (three for 59) got his man caught behind before lunch with a delivery which did not swing but brought a deserved outcome for the bowler's perseverance.
Johnson soon made Paul Collingwood his fourth victim, the third to go lbw to inswing.
Umpire Marais Erasmus initially ruled the ball had not hooped in quite enough to hit the stumps. But after Johnson requested DRS evidence, 'Hawkeye' overturned the verdict.
Matt Prior and Graeme Swann each dug in after lunch to lend Bell valuable support.
Peter Siddle was detailed to bounce out the next wicket - and the tactic eventually worked when Prior tried to ride the bounce but unluckily deflected the ball down on to the base of his leg stump,
via his hip.
Swann refused to give in during an unequal struggle, until the return of Harris saw him off - caught-behind, pushing forward.
The classy Bell had barely put a foot wrong and brought up his 79-ball 50 with an appropriately commanding punch on the up past cover off Harris for his sixth boundary.
With the tail exposed, though, he edged an attempted drive at the same bowler high to Ponting at third slip - and it was no surprise that Johnson encountered no further resistance as the last four
wickets fell for just six runs.
Australia began batting again already in telling credit.
James Anderson, one more success short of 200 Test wickets, used the new ball admirably - conceding just three scoring shots in his first seven overs.
Finn followed Tremlett's first-innings lead to see off Hughes, caught in the slips after being pegged back with earlier short balls.
Four overs later, he had Ponting too - caught-behind down the leg-side off his glove, with the aid of DRS, for just a single.
The Australia captain had therefore made just 22 runs in his last four Test innings. But his team nonetheless still had a chance to push for a series-levelling victory.
Clarke replaced his skipper in the middle and started confidently with a four off his first ball as he moved to a rapid 20. But he was undone by a bit of extra bounce from Tremlett which saw him
play on to his stumps to leave the score at 64 for three.
But Watson (61) and Michael Hussey (24) steadied the ship with a composed partnership, both dealing well with the introduction of Swann to the attack, with the former going on to reach his
half-century from exactly 100 balls.
The pair were still there at stumps with Australia looking well-poised to set England a challenging fourth-innings chase as they look to level the series.