Lanka dismissed for a merely 246 ….

Sri Lankan captain Mahela Jayawardene scored a superb century but his team capitulated yet again on day three of the second Test against Australia in Hobart.

But thanks to Australian skipper Ricky Ponting's decision not to enforce the follow-on - Sri Lanka could yet escape with a draw given afternoon rain is forecast for the final two days.

After bowling Sri Lanka out for just 246 in reply to Australia's 5-542 declared, Ponting chose to bat again and by stumps Australia had increased its overall lead to 407 in reaching 1-111 in its second innings with Phil Jaques scoring an unbeaten half century to go with his two centuries already in this series.

Australia will almost certainly declare early on day four and will be hoping Hobart's unpredictable weather - which restricted play to just 61 overs on day two - holds off to allow the home side to record its 14th successive Test victory and remain on track to equal the record of 16 straight Test wins, set by Steve Waugh's team from 1999-2001.

Check highlights of Day 2 to refresh yourselves :

Rain is the only thing that can save Sri Lanka on a day when their batsman - aside from Jayawardene - wasted ideal batting conditions as Australia's bowlers made a pitch that had appeared lifeless for the two days suddenly look bowler-friendly.

It was also a day Tasmanian grade cricketer Rhett Lockyear will never forget as he played a key role in one of the most bizarre dismissals imaginable during the middle session.

Jayawardene had already lost several partners but finally looked to have found a willing ally in injured fast bowler Farveez Maharoof, who was batting with a runner - Chamara Silva - after sustaining a fractured ankle on day one.

But Maharoof was batting well until he smashed a straight drive off Stuart MacGill into the stumps at the non-strikers' end.

The ball quickly deflected to Lockyear - filling in for the injured Andrew Symonds - at mid-on and caused confusion between Jayawardene at the non-strikers' end and Silva, who set off for a run only to be sent back.

Lockyear did not panic and produced a fine return to keeper Adam Gilchrist to leave Silva well short of his ground with Maharoof run out for 19.

Earlier the Sri Lankan middle order offered little resistance after Brett Lee had made two early breakthroughs while Mitchell Johnson claimed the key wicket of Sri Lanka's best batsman Kumar Sangakkara for 57 just before lunch.

Sangakkara, who had already been given a life on 13 when Gilchrist dropped a sitter off Lee, was tempted again outside off stump and only succeeded in finding Mike Hussey in the gully.

It was the key wicket of the day for once the man rated the fourth best batsman in the world departed, Sri Lanka fell apart.

Leg spinner MacGill then claimed the wickets of Sanath Jayasuriya (three) and Silva (four) while Stuart Clark had keeper Prasanna Jayawardene caught behind for a duck.

But Lee was again the pick of the bowlers after grabbing his fourth successive four wicket haul of the series when he finally had Jayawardene caught at deep mid wicket for 104 to end the innings.

Jayawardene's application shamed his teammates and he thoroughly deserved to score his first Test century against Australia as the home side did not even need the services of Symonds, who did not bowl after injuring his ankle while batting on day two.

However Symonds' absence no doubt played a factor in Ponting's decision to give his bowlers a rest in deciding to bat again and now he will be just hoping the weather stays fine to allow Australia to clinch yet another ridiculously easy victory.