Tries from Cardiff Blues' Cameron Lewis and Dane Blacker were not enough as Wales U20s slipped to a slender 24-17 defeat in the opening encounter of the World Rugby U20s Championship.
They led for much of the first-half following Lewis’s effort but trailed at the break after Australia hit-back through Henry Hutchison.
Wales dominated the majority of the second-half and claimed the lead once again with a fine try off first phase from Dane Blacker.
But that led was instantly surrendered as replacement Harry Johnson-Holmes powered over for the young Wallabies side.
An Arwel Robson drop-goal looked to have salvaged a draw for Wales in the closing stages, but Australia responded immediately to snatch the victory at the death.
Wales named a side containing eight starters from Cardiff Blues and it did not take long for one of them to open the scoring.
Jason Strange’s men broke out following an early period of Australian pressure and looked lively on the attack.
They surged into the lead on six minutes after Arwel Robson found Ellis Shipp with a cross-kick and Lewis was in support to score.
Robson converted to open up an early seven-point advantage and Wales U20s continued to threaten.
The young Newport Gwent Dragons pivot was agonisingly short with a long-range penalty on 16 minutes
Wales U20s continued to cause their Australian counterparts problems and a neat backs move saw Jim Botham released. But he was clattered by a tip-tackle, which saw Simon Kennewell depart to sin-bin.
Wales kicked to the corner and piled on the pressure but were unable to manufacture a scoring moment.
Australia survived the yellow card period unscathed and opened their account through the boot of scrum-half Harrison Goddard.
The Men from Down Under had the nudge at scrum-time throughout, thanks to their giant pack, and when they turned the set-piece on its head in the closing stages of the half alarm bells rang.
They broke to the left and Wales’ defence was out of position but Owen Lane made a superb try-saving tackle on Jzaia Perese.
Australia however, held onto possession and the score eventually came through Sevens star Henry Hutchison. Goddard converted and the wing almost claimed a second with the final play of the half with only a try-saving tackle from Will Talbot-Davies saving the day.
Wales U20 could have levelled on 45 minutes, following a dangerous tackle on Will Talbot-Davies, but Robson fired wide.
They continued to dominate territory and possession but were unable to turn pressure into points.
That was until Cardiff Blues duo Botham and Dane Blacker combined off the back of a scrum on the half-way line on 56 minutes.
Number eight Botham displayed his athletic ability and a clean pair of heels as he broke off the back and he drew the Australian wing before finding Blacker.
The young scrum-half still had plenty to do but he managed to evade the last man thanks to a combination of his blistering pace and a half fend.
Robson converted but Australia instantly hit-back. Full-back Liam McNamara did the damage virtually straight from the restart.
Wales clung on but Australia had a sniff of the whitewash and their pack finished the job with Harry Johnson-Holmes the scorer.
Goddard converted again to restore his side’s three-point advantage.
With minutes remaining, Robson's drop goal looked to have secured his side a draw, but another instant reply by the Aussies saw Jzaia Perese storm past the Welsh defence to claim the match-winning score.