MANCHESTER: Australia took a giant step towards retaining the Ashes in the fourth test at Old Trafford on Saturday after they left England needing 365 runs to win with eight wickets remaining heading into the final day.

After declaring their second innings on 186-6, with a lead of 382, thanks to yet another outstanding innings from Steve Smith, who made 82, Australia heaped the pressure on England with two wickets late in the day.

Pat Cummins grabbed two wickets in two balls to leave Joe Root's side reeling, before the hosts regained some composure to reach 18-2 at the close.

Australia were the better side in all three departments with Cummins, Josh Hazlewood and Mitchell Starc all troubling England and benefitting from sharp catching, but it was once again Smith's batting that proved a class apart.

On a day in which every other batsman struggled to cope with good length pace bowling, Smith, who has now compiled nine straight half-centuries against England, looked utterly unfazed.

"None of us expected the innings Smithy went out with, he was incredible. We'd have been happy to get though the night but Smithy was unbelievable," said Cummins.

Victory for Australia, who bowled England out for 301 early in the day, would ensure they retain the urn, taking a 2-1 series lead into the final test at The Oval next week.

Although England's astounding comeback win in the third test at Headingley will give them some hope, the winning target looks well out of reach for the hosts who must hope they can somehow bat through the day.

"I think we can do it. We've had a chat in the changing room, we're certainly not going out thinking it's all over. There's no use playing at this level (if you don't)," said England coach Trevor Bayliss.

"They believe they are good enough to bat for 98 overs and save the game."

Australia had half an hour at the end of the day to attack England's top order and paceman Cummins had instant success.

With the third ball, Rory Burns found a leading edge and looped his shot to Travis Head at mid-off and then, with the next ball, he clean bowled England captain Root.

Jason Roy kept out the hat-trick ball and England made it to stumps with no further casualties.

EARLY INROADS

Though Australia had a first innings lead of 196, Stuart Broad again caused them early concern, trapping David Warner lbw for a duck -- the third successive time he has dismissed the left-hander without scoring.

Marcus Harris was also leg before to Broad, failing with his review attempt, and when Marnus Labuschagne was trapped in front by Archer, Australia were wobbling at 24-3.

There was no debate about Travis Head's departure, as Jofra Archer sent his middle stump flying but, once again, first innings double centurion Smith took charge.

Matthew Wade made 34 in support and then captain Tim Paine added 23, while Smith moved within sight of becoming the first batsman to score a double century and a ton in an Ashes encounter and only the eighth to do so in any test.

Yet he mis-timed a big shot off spinner Jack Leach, which was pocketed by Ben Stokes in the deep, to depart for 82 off 92 balls, another superb innings decorated with 11 boundaries.

Earlier England narrowly avoided the follow-on after they were bowled out for 301, leaving Australia with an imposing lead.

Their innings crumbled thanks to a fine combined effort from Australia's pace attack with Hazlewood ending with four wickets while Starc and Cummins picked up three each.

Starc amply justified his inclusion for this test with the key breakthrough wickets after England resumed on 200 for five, removing Jonny Bairstow (17) and Ben Stokes (26).

Jos Buttler offered some resistance with his 41 before he was bowled by Cummins.