England must win their last three games to avoid elimination after Ricky Ponting led Australia to a seven-wicket win over Michael Vaughan's men.
England moved closer to World Cup elimination as Australia brushed them aside in their relentless pursuit of a third successive title.
Boosted by their spirited fightback in Wednesday's two-run defeat by Sri Lanka, England were hopeful of giving the reigning world champions their first competitive match of the tournament.
But despite Kevin Pietersen breaking England's century duck for the tournament, their mid-range total of 247 was not enough to challenge Australia and they breezed to a convincing seven wickets victory with 16 balls remaining.
It was Australia's 24th successive World Cup victory, stretching back to 1999, and underlined the massive gulf in class between the two sides battling for a place in the last four.
Led by captain Ricky Ponting's superb 86 from 106 balls, Australia never lost confidence in their ability to surpass England's total despite the run-rate reaching nearly six an over at one stage.
In comparison, England were ponderous in the field, lacked belief with the ball and invention when they batted, and looked anything but potential semi-finalists.
England could and should have set a far more challenging target having overcome their traditional troubles at the top of the order with Pietersen and Ian Bell guiding them to 163 for two with 20 overs remaining.
It was a platform their lower order ought to have exploited but instead they lost three wickets for 15 runs inside six overs, were forced to rebuild and only three batsmen reached double figures before they were dismissed with a ball remaining.
Having acknowledged their problems with the top order by recalling Andrew Strauss for his first match in two months at the expense of Middlesex team-mate Ed Joyce, England would have hoped to have enjoyed a better start after winning the toss and starting to bat.
But captain Michael Vaughan continued his dismal World Cup by chopping fast bowler Shaun Tait on to his stumps for five to take his tally to 12 runs in the last four innings.
Strauss fared little better before departing for seven in almost identical fashion and at 24 for two it was left to Bell and Pietersen to try to take England to a competitive total.
Pietersen, as ever, progressed at a quicker rate and reached his half-century off only 49 balls before being given the first of two reprieves.
Having just reached his sixth half-century in his last eight one-day internationals Pietersen attempted to drive a slower ball from Andrew Symonds through mid-wicket only for Ponting to put him down diving full length at mid-wicket.
The Hampshire batsman was given another reprieve on 63 when he miscued an attempted pull off Tait which looped towards Matthew Hayden at mid-off, but one of the safest hands in world cricket dropped the regulation chance.
At that stage England must have thought luck was smiling on them only for fortunes to reverse in the next over when a full-blooded Pietersen pull off McGrath was prevented going for four when it hit umpire Rudi Koertzen at square leg and England had to settle for a single.
The significance of that was only felt from the next delivery when Bell, who had progressed to 77 off 90 balls, drove Glenn McGrath on the up and picked out Mike Hussey at extra cover.
His dismissal was followed six balls later by Tait claiming his third wicket of the innings when Collingwood chased a wide delivery and edged behind.
Andrew Flintoff's struggles with the bat continued when he came down the wicket to Brad Hogg and allowed Adam Gilchrist to complete a simple stumping.
But the loss of those three wickets for only 15 runs seemed to steel Pietersen's determination and he claimed England's only century in the last five World Cups against Test-standard opposition.
Having restricted England to a far lower total than expected, Australia never really looked back after Gilchrist and Hayden shared a 57-run opening stand.
Flintoff claimed Gilchrist in his opening over when he cut to point and Hayden was bowled with Collingwood's first delivery to provoke the first signs of alarm in Australia's dressing room at 89 for two.
But a brilliantly-paced 112-run stand spanning 21 overs between Ponting and Michael Clarke firmly put England – who had won their three previous one-day internationals against Australia – in their place.
Ponting was run out by Collingwood with Australia just 47 shy of victory and 10 overs remaining and they were propelled over the line by Symonds, who hammered 28 off 28 balls after surviving a contentious catch by Pietersen on four when his momentum took him over the boundary rope.
Symonds hit the winning runs with an aggressive pull off Sajid Mahmood for four to complete a comfortable success which leaves England needing to win their remaining three matches in the Super Eights to stand any chance of reaching the semi-finals.
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