After misadventures against Pakistan and Sri Lanka, England ran aground when chasing for the third time in the tournament, dismissed for an error-strewn 221.
With India and New Zealand still to play, there is now minimal leeway if the world’s No 1 side are to reach the semi-finals of their own competition.
Australia captain Aaron Finch paved the way for his side’s win, weathering a tricky start after being sent in and making exactly 100, his second of the World Cup.
Yet England rallied well with the ball, dragging the score back from 173-1 in the 32nd over to a more modest 285-7.
That still proved too much, though, Jason Behrendorff and Mitchell Starc splitting the wickets as England’s top order limped to 53-4.
The left-arm pair finished with nine dismissals between them, including Behrendorff’s maiden five-wicket haul.
Just as he did in a losing cause against Sri Lanka Ben Stokes stood tallest, battling apparent leg cramps on his way to a bullish 89.
But he received precious little support as a much-vaunted batting line-up again fell short.
As anticipated, Steve Smith and David Warner were booed to and from the crease on their first return to the home of cricket since year-long bans for ball-tampering, but that proved little more than a sideshow on a day that cranked up the pressure on Eoin Morgan’s men.
The captain handed his bowlers first use of a fresh pitch offering a handy hint of sideways movement, but Australia quickly found their luck was in.
Finch sprayed a thick edge over second slip from Chris Woakes’s second ball of the day and continued to lead a charmed life.
James Vince got one hand to a diving chance at backward point and Woakes got the bad end of a marginal lbw decision on DRS.
Warner also struggled for fluency, but the pair eventually settled as England’s changes came up short, Mark Wood leaking 24 runs in three overs and Adil Rashid’s first costing 10.
Moeen Ali finally landed a blow with one that spun sharply at Warner, who lobbed to gully moments after becoming the first player to reach 500 runs at the tournament.
With Finch and Usman Khawaja adding another 50 a total of 350 did not seem outlandish, but it was England who wrestled control of the innings, taking six for 112 in the last 18 overs.
Archer had Finch caught at fine leg the ball after his century, Woakes reversed his earlier bad fortune to take the popular wicket of Smith as well as Pat Cummins, while Mark Wood and Ben Stokes took one each.
England would have been happier had Jason Roy been fit to return to lead their pursuit, but even he might have struggled to keep out the ball that earned his stand-in a first-over duck.
Vince was desperate for a score but instead received a booming, inswinging yorker from Behrendorff that rocked back middle stump. It was only Behrendorff’s second delivery against the old enemy and he will do well to better it.
Fomer Yorkshire bowler Starc, meanwhile, has a long and proud record against England and extended it with two key scalps in successive overs.
Joe Root was his first, pinned lbw so cleanly to a full ball he barely thought about referring the decision.
Morgan’s departure was more reckless, taking on a short one but merely helping it round to fine leg where Pat Cummins gladly accepted.
Yorkshire’s Jonny Bairstow hinted at a fightback, piecing together 27 with five boundaries, but replicated his captain’s error in judgement.
Another short ball, another mis-timed pull and another catch for Cummins.
Stokes began another lone hand, a dogged effort that included eight fours and two sixes off Glenn Maxwell, and pressed on after receiving treatment on both legs.
He was sixth out on 177, comprehensively cleaned up by a sumptuous Starc yorker, although the all-rounder was comfortably England’s most diligent performer.
Jos Buttler flicked Marcus Stoinis to long leg for 25 – a half-hearted knock from a man of his pedigree – while Moeen, Woakes and Archer all succumbed cheaply in Behrendorff’s decisive final spell.
That late flurry of wickets earned him a career-best 5-44 as the tail toppled and Starc wrapped things up by taking out Rashid, leaving 5.2 overs unused and many questions unanswered.