Australia, led by Damien Martyn's unbeaten century, scored a thrilling seven-run victory in a triangular series one-day international on Saturday after England failed to capitalise on a 165-run opening stand.

Needing 12 runs to win with four wickets in hand at the start of the last over, England could manage only four runs for the loss of captain Nasser Hussain, who made a gallant 43 off 38 balls.

Tailender Andy Caddick faced the last three balls, hitting a two then missing the final two deliveries from 21-year-old Shane Watson.

Watson held his nerve to take two for 36 from eight overs after the more experienced Brett Lee went for 65 from his 10 overs.

Australia won the toss and batted first, scoring 271 for four as Martyn reached his century with a boundary off Caddick to fine leg from the last ball of the innings at Bellerive Oval in Hobart.

Man of the match Martyn, who made 101 not out, shared partnerships of 118 with Michael Bevan (52) and 100 with Jimmy Maher (49 not out). Dropped on 51, Martyn stroked 10 boundaries and faced 116 balls in his fourth one-day international hundred.

The 31-year-old also removed England opener Marcus Trescothick for 82 with his medium-pacers (1-34 from six overs) and took a crucial outfield catch to dismiss Alec Stewart for 16 with England 252 for six after the veteran had added 41 with Hussain.

STRONG POSITION

Left-handers Trescothick and Nick Knight (85) put the tourists in a strong position with a polished opening stand of 165 in less than 32 overs but England slumped to 211 for five, losing three for wickets 18, before finishing on 264 for seven.

Left-arm wrist spinner Brad Hogg took the third, fourth and fifth wickets to fall, including those of Owais Shah (8) and Paul Collingwood (1) in the 43rd over, in his 3-55.

Australia wrestled back the advantage from England, who had appeared set to hand Australia their second consecutive loss in the triangular series.

Hussain was the only England batsman to reach 20 apart from the two openers.

"I knew if we could get a couple of wickets we could put pressure on their new batsmen and turn this thing around," Australia captain Ricky Ponting told reporters.

Hussain was critical of his side's effort in the field, which included two dropped catches by Paul Collingwood and 22 wides including 11 from lanky fast bowler Stephen Harmison (1-58 from eight overs).

"At two o'clock it might seem like just another wide, but at 10 past six they are desperate runs you need," Hussain told reporters.

Australia were also sloppy in the field as the normally efficient Bevan dropped two simple chances from Knight's bat.

Australia retain their lead in the series with 22 points from five matches, ahead of England on 13 points and Sri Lanka on seven.

Australia, who suffered a 79-run defeat against Sri Lanka in Sydney on Thursday, were missing Shane Warne and Jason Gillespie through injuries but recalled fast bowler Glenn McGrath after he recovered from a side strain.

But McGrath bowled seven overs for 31 before leaving the field for treatment to a back injury.

England play Sri Lanka in the eighth match of the series in Sydney on Monday.