Captain Steve Smith frustrated England with a fighting half-century and pushed Australia to 165 for four at the close of a see-sawing day two, rescuing the hosts after a top order collapse in the series-opening Ashes Test in Brisbane on Friday.
With his team in peril at 76 for four, Smith's unbeaten 64 in an 89-run stand with number six Shaun Marsh gave Australia hope of reeling in England's first innings 302 at the Gabba.
Lefthander Marsh, under pressure to perform after winning his eighth recall to the test team, played a fine support role to be 44 not out at stumps.
"I think the game's in the balance still," Australia spinner Nathan Lyon told reporters.
"There are two unbelievable batters at the crease.
"Hopefully we can put (England) under pressure in the second innings but there’s a lot of cricket in this game."
After day one saw only four wickets fall, 10 tumbled on day two as the Gabba pitch recovered some of its customary bounce and pace.
England lost their last six wickets in a hurry to be out for 302 at lunch and Australia seemed to be back in control at their Brisbane fortress.
But the pendulum swung again as England's bowlers scythed through the hosts' top order.
After replacing Matt Renshaw in the squad, opener Cameron Bancroft's first bat in his Ashes Test debut lasted 19 balls after he nibbled at a teasing ball from Stuart Broad and was caught behind for five.
Number three Usman Khawaja's problems against spin in the subcontinent followed him home as he was trapped lbw for 11 by Moeen Ali.
The alarm bells began ringing when opener David Warner holed out for 26, pulling paceman Jake Ball straight to Dawid Malan at short mid-wicket to give the Ashes debutant his first wicket in Australia.
And Australia were left reeling at 76 for four when Peter Handscomb was trapped lbw for 14 by James Anderson in the first over after tea.
Once again it fell to Smith to mount a rescue mission and the 28-year-old was a rock through 148 balls as he ground out one of his grittiest half-centuries.
He reached his 22nd Test fifty with a single having all but nicked Anderson behind on the first ball faced.
England had been in control at 246 for four in the morning session when momentum shifted away from them but seamer Ball felt his team were well-placed.
"I think we're in a good position," he said.
"I think with the turn and a little bit of varied bounce we were quite happy with the (302) score."
Malan had reached his third half-century in his sixth Test, completing a hat-trick of fifties for England's rookie batsmen after opener Mark Stoneman had 53 on day one and number three James Vince scored 83.
But like his colleagues, Malan squandered the chance by pulling Mitchell Starc straight to a fielder and was out for 56.
The wicket broke a stubborn 83-run partnership with Moeen, and England promptly crumbled.
Denied a wicket on day one when recalled wicketkeeper Tim Paine grassed a nick from Vince, spinner Lyon trapped Moeen lbw for 38 and bowled Chris Woakes for a duck in quick succession.
Jonny Bairstow was caught for nine by Paine skying a pull shot, before Warner took a brilliant, diving catch at leg gully to remove Ball for 14.
Broad was dropped in the deep by Marsh when on 10 but he was out for 20 pulling Josh Hazlewood to Handscomb, bringing an end to England's innings.
Starc captured 3-77 and Cummins 3-85 for Australia.