Steven Finn took England to the verge of a stunning victory in the third Test against Australia at Edgbaston on Thursday and a 2-1 Ashes series lead.

At the close of a remarkable second day, Australia were 168 for seven in their second innings -- a lead of just 23 runs -- with three wickets standing and three days left to play.

Middlesex fast bowler Finn, recalled for his first Test since 2013, had taken five wickets for 45 runs in 13 overs following his two for 38 in Australia's meagre first innings 136.

Opener David Warner struck a defiant 77 on Thursday, one of only three double-figure scores so far in Australia's second innings.

Peter Nevill was 37 not out after being dropped on 35 when opposing wicket-keeper Jos Buttler failed to hold what would have been a stunning diving catch off Stuart Broad.

Mitchell Starc was unbeaten on seven.

A mere 19 matches in the 138-year history of Test cricket had ended inside two days, with the last occurrence in England when the West Indies were beaten by an innings and 39 runs at Headingley in 2000.

But a side strain suffered midway through his ninth over by James Anderson -- on his 33rd birthday -- hampered England's hopes of adding to that list.

Finn, however, returned to remove Mitchell Johnson (14) with the first ball of his new spell when the batsman sliced to point before Nevill and Starc saw out the day.

The first two days of this match have witnessed a remarkable turnaround from England's humiliating 405-run defeat in the second Test at Lord's which saw Australia level the five-match series at 1-1.

But whereas that clash had taken place on a largely placid pitch, the course of this Test owed much to Australia captain Michael Clarke's decision to bat first on a seaming surface offering sideways movement.

Anderson, England's all-time most successful Test bowler but wicketless at Lord's, led the way with an Ashes-best six for 47 in a first innings that lasted a mere 36.4 overs.

England couldn't quite rival that display on Thursday but seven wickets in 55 overs was still an impressive haul.

Veteran opener Chris Rogers, whose 52 had been the lone batting highlight of Australia's first innings, fell for six when he was lbw to paceman Broad.

SCORES IN BRIEF

AUSTRALIA: First innings 136

ENGLAND: First innings 281 (Cook 34, Bell 53, Root 63, Moeen 59, Broad 31; Starc 2-71,  Hazlewood 3-74, Johnson 2-66, Lyon 3-36)

AUSTRALIA: Second innings 168 for 7 (Warner 77, Nevill 37 not out, Johnson 14; Finn 5-45)