Michael Hussey was run out cheaply in his final Test and Michael Clarke fell for 50 as Sri Lanka retained hope of a maiden Test victory in Australia.
As Matthew Wade made the most of his promotion to No.6 by reaching 47 not out in Australia’s 6-342, Sri Lanka fought hard to stay in the contest on a deteriorating SCG wicket.
Peter Siddle added a feisty 16 not out as the first innings lead reached 48 at the end of day two of the third Test.
A substantial advantage is critical to Australia’s prospects of chasing a target in the fourth innings on a pitch already turning sharply and playing plenty of tricks.
Veteran spinner Rangana Herath got the prize scalp of Clarke, who holed out to midwicket after being beaten by a sweetly flighted delivery.
Hussey, who was afforded a guard of honour by the Sri Lanka fielders when he walked to the middle, fell seven overs earlier when Clarke called him through for a short single only for Dimath Karunaratne to throw down the stumps from cover with the left-hander’s despairing dive leaving him 30cm short of safety.
Hussey’s 25 meant his SCG average dropped below 100, although he maintained his century average against Sri Lanka.
Sri Lanka had immediate success when they took the second new ball with Mitchell Johnson’s defiant 13 ending with a nick to replacement keeper Dinesh Chandimal.
Johnson and Wade had steadied the innings after Clarke and Hussey’s departures left the team at 5-271 and still short of Sri Lanka’s first innings 294.
In keeping with Australia's at times wasteful batting, David Warner and Phil Hughes earlier threw away their wickets with centuries beckoning.
Warner, who broke through the 1000-run barrier in Tests, has four half-centuries from as many innings after falling for 85 with a career high score on the horizon.
After two hours of brutal but controlled hitting, he charged Tillekeratne Dilshan but only managed to steeple a catch to deep mid-off.
Then Hughes eased to 87, carving nine boundaries mostly through his favourite area behind point, before edging behind as he slashed at Herath.
Clarke could have been out first ball when Herath hit him in front but Sri Lanka decided against reviewing the not out decision.
In the morning session, Ed Cowan fell to a careless run out with a dire piece of running.
He dawdled the first run after Warner clipped to midwicket, hesitated on the way back and was 5m short of his ground when Nuwan Pradeep’s throw came from the infield.
Cowan, Warner and Hughes have each been involved in two run-outs in the series, with each of the batsmen falling to a bad misjudgment.