Led by a century from opener Chris Rogers and a 136-run stand with Shane Watson, the Australians had few problems getting the required 201 runs on the fourth day to seal England's fate at the Melbourne Cricket Ground.
England contributed to their own demise with two confidence-sapping dropped catches by skipper Alastair Cook early in the day to take all the steam out of the dispirited tourists.
The two fielding blunders from the team leader were psychological body blows for England and evidence of batsman Kevin Pietersen's comments on Saturday in a television interview that the tourists were "mentally fragile".
Playing on his home ground, veteran left-hander Rogers claimed his second Test century after scoring 110 against England in the last series earlier this year at Durham.
Rogers, 36, was out caught behind for 116 off 155 balls cutting Monty Panesar, with his team some 31 runs short of victory.
At the end, Watson was unbeaten on 83 with skipper Michael Clarke not out six with Australia 231 for two.
It was the best fourth innings run chase in 51 years at the Melbourne Cricket Ground since England's 237 for three in 1962-63.
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