Nathan Lyon celebrates a wicket on day three. Source: SkySports.com

Australia need a record 412 runs in the fourth innings to win the first Test against England.

The tourists resumed at 5-264, before a lower order collapse saw the Aussies bowled all out for 308 half way through the first session on day three.

Shane Watson was the great hope for Australia heading into the day, with the much maligned all-rounder 29 not out with Australia 166 runs behind England's first innings.

When Watson (30) was dismissed LBW yet again, it sparked an Australian collapse, with Lyon (6), Haddin (22), Johnson (14), Starc (0) and Hazlewood (2*) proving little resistance.

England then began their second dig 122 runs in front, and went about inflicting further pain on Australia.

The Aussie bowlers managed to grab wickets at steady intervals, however, the majority of the England batsmen made starts, to ensure Australia would face an improbable fourth innings target.

Root was again the main man, with 60, while Ian Bell also scored 60, to help the hosts reach 289 in their second innings.

Lyon took four wickets, while Starc, Johnson and Hazelwood each took two.

Australia will begin day four needing to score a record fourth innings total to take a one nil series lead.

The highest successful fourth innings run chase on British soil is 404 in 1948 when Don Bradman’s Invincibles won the fourth Test at Headingley.

If Australia can chase down the total, if will become one of the most famous run chases in history, and will no doubt dent the English confidence and possibly set the tone for the remainder of the series.

See the full scorecard at Cricket.com.au