In Pictures: British and Irish Lions suffer agonising defeat to Australia in Melbourne
Australia 16 British and Irish Lions 15: The British and Irish Lions face a Test series decider in Sydney next Saturday after Australia clinched a nerve-shredding victory at Etihad Stadium.
Leigh Halfpenny's five penalties looked to have ended 16 years of hurt. Not since South Africa 1997 have the Lions won a Test series.
But he missed a penalty from halfway with the game's final kick, and left the pitch distraught as Australia prevailed courtesy of centre Adam Ashley-Cooper's 75th-minute try that his midfield partner Christian Leali'ifano converted.
The Lions were on course for an unassailable 2-0 series lead, but Ashley-Cooper rounded off a concerted spell of pressure, and Leali'ifano, who had earlier booted three penalties, kept his composure to edge Australia ahead.
A pulsating contest will now go to the wire, although the Lions might have to make do without their skipper Sam Warburton, who limped off nursing what appeared to be a knee injury 13 minutes from time.
The Lions now head north to Queensland for four days in the coastal resort of Noosa, and they will need to regroup quickly or face suffering fresh heartbreak and see their run of series losses extended.
Australia, though, are upwardly mobile, and have stolen momentum off their opponents at a critical time.
The Lions announced their intentions immediately, playing with a high tempo as hooker Tom Youngs and lock Alun-Wyn Jones made territorial in-roads before Halfpenny saw a 48-metre penalty attempt rebound off the bar.
Jones, though, twice needed treatment for an injury, which brought into early focus the Lions' decision not to have a specialist lock on replacement duty, but a ninth-minute Halfpenny strike made it 3-0.
Australia ended the first Test enjoying scrum domination, and there were alarming early signs for the Lions, with Mako Vunipola - called up after injury sidelined Alex Corbisiero - put under huge pressure.
And when the England prop collapsed a 16th-minute scrum, Leali'ifano stepped up to land an equalising penalty.
Things rapidly deteriorated for the Saracens loosehead when he was whistled again by referee Craig Joubert, and Leali'ifano slotted a second penalty before Halfpenny cancelled out that kick five minutes later.
Joubert, as he had done in the Scotland versus Wales Six Nations game three months ago, offered no scrummaging leeway for either side, and the Lions then cashed in when Australia wheeled a scrum and Halfpenny completed his penalty hat-trick.
But Leali'ifano also maintained outstanding accuracy, making it three penalties from three attempts just before half-time, yet there was still time for Halfpenny to restore the Lions' three-point advantage after Joubert punished Wallabies flanker Ben Mowen for not rolling away.
A 12-9 interval advantage was somewhat fortuitous for the Lions, whose set-piece problems materialised to a worrying degree at times.
At one stage they put 11 players in a lineout, yet they lacked a clinical edge and Australia looked the most likely try-scorers during an opening 40 minutes high on endeavour and effort, but lacking creative brilliance.
The high error count continued early in the second period, with both sides struggling to keep hold of possession. Technical errors also abounded, and Joubert did not require a second invitation to maintain the prolific penalty count.
Lions centre Brian O'Driscoll then saw a pass intercepted that put his team under pressure, and there was a sudden snap and rhythm to Australia's attacking game that threatened to lift matters above the mediocre.
Gatland then made his first change, sending on Conor Murray for scrum-half Ben Youngs after 54 minutes, which was quickly followed by Youngs' brother - hooker Tom - being replaced by Richard Hibbard.
A scoreless third quarter meant the Lions maintained their slender interval advantage. although not before an injury scare when wing George North hit the ground following a crunching tackle on Wallabies speedster Israel Folau.
North quickly returned to action, before Halfpenny rifled over a penalty from halfway and the Lions looked as though they could breathe easily despite losing Warburton for the final stages.
But Australia had other ideas, and they stormed deep into the Lions' 22, driven forward by their outstanding hooker Stephen Moore, meaning it was all hands on the pump for the tourists.
They tackled prodigiously, yet wave after wave of Wallabies attacks had to take a toll, and Ashley-Cooper smashed through Davies for a try that Leali'ifano nervelessly converted.
The final drama was reserved for Halfpenny, though, but his kick drifted to the right and Australia were home amid dramatic scenes.
Belfast Telegraph Digital