DEFENDING champions Australia 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.

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.

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

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