Mortlock slides over to score. (Getty Images)

By Alex Lowe, PA Sport, Sydney

Defending champions Australia will play England or France in the World Cup final next Saturday after they blasted the All Blacks into oblivion at Telstra Stadium on Saturday.

Tournament favourites New Zealand had no answer to a colossal Wallabies defence, and they could not find a way through, apart from skipper Reuben Thorne's first-half try.

Australia went into the sell-out semi-final clash as clear underdogs, yet they produced comfortably their best performance of the competition to destroy New Zealand's World Cup dream.

Ice-cool goalkicker Elton Flatley booted 17 points, while centre Stirling Mortlock pounced for an 80-metre interception try in front of a World Cup record 82,444 crowd.

It will be Australia's third World Cup final appearance. On both previous occasions, they triumphed, beating England in 1991 and France four years ago. Their opponents will be known after tomorrow's second semi-final.

But the victory was marred by injuries to Mortlock and skipper George Gregan, who both limped away from the action, while prop Ben Darwin was carried off.

England beat Australia in Melbourne five months ago, yet the Wallabies will now take some stopping, even accounting for potential fitness setbacks.

The All Blacks, in contrast, must prepare for a debilitating third place play-off game on Thursday night.

Australia were almost knocked out of their stride by Ireland at Melbourne's Telstra Dome a fortnight ago, but they survived 17-16 and have now hit something approaching peak form.

New Zealand, meanwhile, must go back to the drawing board. It was a shattering defeat, and blew away the popular theory that World Cup 2003 was theirs for the taking on a night of seismic proportions as far as planet rugby was concerned.

Australia made all the early running, snaffling possession from the kick-off and then putting together several attacking phases.

New Zealand just could not get their hands on the ball, and when even when they stole Australia's first line-out throw, the fired-up Wallabies still secured turnover possession.

The All Blacks' first attack on eight minutes spread Australia's defensive formation wide, and a crunching Wendell Sailor tackle on opposite number Joe Rokocoko took its toll.

New Zealand were still able to spin possession wide from the ensuing line-out, and full-back Mils Muliaina looked over in the corner, despite pressure from Wallabies left-wing Lote Tuqiri.

English referee Chris White referred the decision to video official Jonathan Kaplan, and after a lengthy delay, a knock-on was the verdict.

Before the All Blacks could regroup, Australia hit them with a sucker-punch try.

Fly-half Carlos Spencer flung out a pass on the edge of Australia's 22-metre line, but it landed in Mortlock's path, and he sprinted away on an unopposed sprint for glory. Flatley added the conversion, and Australia led 7-0 after 10 minutes.

New Zealand were left reeling by such an opportunist dash, and they were unable to exert any sustained spell of pressure.

Australia launched the second quarter in sparkling fashion when Tuqiri set off on a menacing break, but when the Wallabies moved possession wide, All Blacks number eight Jerry Collins recklessly lunged at Australian lock Nathan Sharpe.

Even though it was clearly a dangerous tackle, referee White opted against showing a yellow card. But as Sharpe left the field for treatment, Flatley landed the resulting penalty for a 10-0 advantage.

Spencer and centre Leon MacDonald both missed kickable penalties for New Zealand, which summed up the All Blacks' sense of disarray, as Australia mounted punishing pressure.

Another Mortlock break had New Zealand's defence retreating, and although the Wallabies messed up a gilt-edged scoring chance, Flatley slotted his second successful penalty that secured a richly deserved 13-point lead.

Wallabies full-back Mat Rogers returned to the action - Joe Roff briefly replaced him - following treatment for a cut, but New Zealand ended the half belatedly on top.

On a rare occasion that quality possession came their way, Spencer launched a mesmerising run that had Australian defenders searching for answers.

His angles of attack were breathtaking, before he delivered a scoring pass to Thorne that issued Australia with a timely reminder about New Zealand's World Cup intentions. MacDonald converted, and the All Blacks were back in touch at 13-7 adrift.

Flatley hoisted Australia nine points ahead when he completed his penalty hat-trick on 42 minutes, and the crowd went wild when All Blacks wing Joe Rokocoko spilled the ball into touch after trying to gather a steepling Rogers clearance.

New Zealand were on the ropes, and they had to dig deep against an Australian side comfortably better than at any other time in the competition.

Their cause was not helped through injured scrum-half Justin Marshall's departure - Byron Kelleher replaced him for his first tournament start.

The Wallabies then lost Darwin, who was stretchered off after he received concerted treatment. Darwin fell awkwardly, and it looked to be a serious injury sustained in the shoulder or neck area.

It was a six-minute stoppage as the Wallabies' medical staff cared for their player, and replacement Al Baxter entered the fray before play resumed.

The disruption had no obvious effect on Australia though, and fly-half Stephen Larkham tore open the All Blacks' defence. Replacement hooker Jeremy Paul almost finished off at the posts, but New Zealand infringed, and Flatley's fourth penalty made it 19-7.

MacDonald reduced the arrears when Wallabies replacement David Giffin drifted offside, yet Flatley's fifth successful strike restored Australia's 12-point advantage at 22-10.

New Zealand grew increasingly desperate as the clock ticked down, finding themselves up against a brick-wall Australian defence that had conceded just five tries in the competition.

Australia won the 1999 World Cup on the strength of their defence, and today's magnificent effort suggested a possible repeat performance.

No-one will seriously bet against them now, but England, maybe England, have just enough in their armoury to burst an expanding Wallaby bubble.

Teams:

New Zealand: Muliaina, Howlett, MacDonald, Mauger, Rokocoko, Spencer, Marshall, Hewett, Mealamu, Somerville, Jack, Williams, Thorne, McCaw, Collins.

Replacements: Kelleher for Marshall (48), Meeuws for Hewett (47), Thorn for Williams (57), Holah for Collins (72).

Not Used: Hammett, Carter, Ralph.

Tries: Thorne.

Cons: MacDonald.

Pens: MacDonald.

Australia: Rogers, Sailor, Mortlock, Flatley, Tuqiri, Larkham, Gregan, Young, Cannon, Darwin, Harrison, Sharpe, Smith, Waugh, Lyons.

Replacements: Roff for Mortlock (72), Grey for Flatley (64), Paul for Cannon (50), Baxter for Darwin (50), Cockbain for Smith (72).

Not Used: Whitaker.

Tries: Mortlock.

Cons: Flatley.

Pens: Flatley 5.

Att: 83,000

Ref: Chris White (England).