The Wallabies convincingly beat the All Blacks by 34 points to 19 in Sydney in the first match of the Bledisloe Cup series which is played within the TriNations.
The All Blacks enjoyed most of the possession but it was the Wallabies who dominated the scoreline and the try count scoring four tries to three.
The result means that Robbie Deans has now enjoyed a run of five matches and is unbeaten in 2008.
The Australians played superb attacking rugby to score four tries and a bonus point to leapfrog the All Blacks and the world champion Springboks to the tournament lead after two games.
The euphoric victory, only a point off the most ever scored against the All Blacks, was coach Robbie Deans' fifth straight and a special one against New Zealand counterpart Graham Henry.
Deans' Wallabies thrilled the near-79,000 home crowd with their adventurous rugby, and came back after the All Blacks had edged in front 19-17 five minutes after halftime.
But Australia finished the better with tries to Rocky Elsom and James Horwill clinching a famous victory.
"A lot was asked of them, we didn't have a lot of possession for long periods and we had to defend, but they did that well and created turnovers," Deans said.
"When the All Blacks scored just prior to halftime and then came back out and scored again that's a tough mental test but the guys got up and responded and finished well."
Australia only scored more points in a Bledisloe Cup Test against New Zealand in their 35-39 loss in 2000.
The All Blacks have now suffered back-to-back Tri-Nations losses after losing 30-28 to South Africa in Dunedin a fortnight ago.
"The game was hugely quick and our guys showed a lot of courage and ability to come back to lead 19-17, but the last 30 minutes we couldn't hold on to the ball," Henry said.
"We've got three games left in the Tri-Nations to turn things around and we have a lot of work to do."
The All Blacks went a man down in the sixth minute when lock Brad Thorn was sin-binned by South African referee Craig Joubert for a high tackle on Wallaby fly-half Matt Giteau as Australia were on the attack.
The Wallabies made the under-manned All Blacks pay with centre Ryan Cross scoring on his starting debut in the 10th minute after Lote Tuqiri put the Australians on the offensive beating three tacklers.
From the next ruck Giteau took a pass close to the ground to send Cross over unopposed.
New Zealand were under immense pressure but they fought their way back with winger Sitiveni Sivivatu particularly dangerous with the ball.
The All Blacks scored through fullback Mils Muliaina in the 24th minute after he kicked ahead and regathered off a quick tap kick.
But the Wallabies were playing confidently and off a scrum win Adam Ashley-Cooper kicked ahead and Tuqiri was bundled off the ball by Sivivatu only for winger Peter Hynes to win the chase and score a converted try for a 17-5 lead.
The All Blacks threw caution to the wind, continually opting to take quick tap kicks and were rewarded right on halftime when hooker Andrew Hore charged through three tackles to score off a Sivivatu pass.
Daniel Carter's conversion kept the All Blacks in the contest at 17-12 at halftime.
Carter kicked the All Blacks to a 19-17 lead for the first time just minutes after halftime when he sliced through and scrum-half Andy Ellis scored off the ruck.
Tuqiri came desperately close to regathering his kick ahead only to be denied by replacement scrumhalf Jimmy Cowan, but Cowan's clearing kick failed to find touch, offering Australia another chance to attack.
Flanker Elsom stormed through an opening and brushed off Muliaina's tackle to score near the posts and Giteau's conversion retrieved the lead again 24-19 after 55 minutes.
Giteau pushed the Wallabies out to an eight-point lead with a drop goal 13 minutes from fulltime.
Lock Horwill made the game safe for the Wallabies when he plunged over for a try six minutes to go with Giteau's conversion pushing the home side out to a 15-point buffer.
In recent times Australia have played second-fiddle to New Zealand in rugby - the All Blacks have held the Bledisloe Cup since 2003 and the Tri-Nations from 2005 - and Saturday's win was only their fourth in their last 10 encounters.
The fierce rivals meet again next Saturday in Auckland.
Scorers
Tries - Ryan Cross, Peter Hynes, Rocky Elsom, James Horwill
Pen - Matt Giteau
Con - Matt Giteau (4)
Drop - Matt Giteau
Cards -
New Zealand
Tries - Mils Muliaina, Andrew Hore, Andy Ellis
Pen -
Con - Dan Carter (2)
Drop -
Cards - Thorn
Round 4
Teams - Australia v New Zealand
Venue - Sydney
Referee - C.Joubert
Ref's Assistant 1 - M. Lawrence
Ref's Assistant 2 - J. Bolabiu
TMO - S. Veldsman
Perf. Rev - S. Hilditch
Australia (15-1): Adam Ashley-Cooper, Peter Hynes, Ryan Cross, Berrick Barnes, Lote Tuqiri, Matt Giteau, Luke Burgess, Wycliff Palu, George Smith (captain), Rocky Elsom, Nathan Sharpe, James Horwill, Al Baxter, Stephen Moore, Benn Robinson.
New Zealand (15-1): Mils Muliaina, Anthony Tuitavake, Richard Kahui, Ma'a Nonu, Sitiveni Sivivatu, Daniel Carter, Andy Ellis, Jerome Kaino, Sione Lauaki , Rodney So'oialo, Ali Williams, Brad Thorn, Greg Somerville, Andrew Hore, Tony Woodcock.
