Alastair Cook, who was saved from dismissal by a no-ball review, had made 61 with night watchman James Anderson alongside him on one after a triple blow from the Australian bowlers had disrupted England's comfortable post-lunch progress.
"It's pretty even-stevens, perhaps slightly in our favor," said Anderson told reporters. "I think we've got a crucial morning session to get through tomorrow. We've really got to dig in tomorrow and hopefully get a decent lead."
England has already retained the Ashes courtesy of their innings and 157-run victory in Melbourne last week but Australia could still square the series at 2-2 with a victory this week.
That looked highly unlikely when Australia were reduced to 189-8 in the morning but Mitchell Johnson and Ben Hilfenhaus then delighted the 40,000 crowd at the Sydney Cricket Ground with a splendid stand of 76 for the ninth wicket.
"Obviously it was a very important partnership Hilfy, and myself" said Johnson, who made 53.
"It's always exciting to go out there and score runs... That just gives us confidence going out there and bowling."
After dismissing the Australians, England were cruising at 98 without loss in their reply when Hilfenhaus bowled Andrew Strauss for 60 to reignite the contest.
Johnson then struck to remove Jonathan Trott for a duck six balls later and England were on the rack.
Kevin Pietersen, who came out to the crease to a chorus of boos, survived a shaky start, most notably when he hit the ball between his legs and the stumps when he was on eight.
Cook was approaching his third half-century of the series on 46 when Australia's debutant spinner Michael Beer thought he had claimed his first Test wicket.
England's top batsman of the series walked after ballooning the ball into the hands of Hilfenhaus but umpire Billy Bowden called him back and checked with the third umpire, who confirmed that the hapless Beer had overstepped the crease.
"It can be very frustrating," added Johnson, who experienced the same thing in Melbourne when Matt Prior was saved on five and went on to make 85.
"But I think he handled it very well and the way he bowled afterwards was a very good sign for us."
Pietersen look destined to stay with Cook until the end of the day but, when he was on 36, a rush of blood to the head saw him mis-time a hook shot off Johnson and Beer took a comfortable catch at deep backward square.
It was a shot that recalled those made by three Australian batsmen to edge Anderson deliveries as the hosts lost four wickets for 55 runs in the morning.
Brad Haddin went for six after a wild slash, Steve Smith departed for 18 with an ill-advised attempt at a drive and Peter Siddle went for two with another poor shot after only facing four balls.
Mike Hussey will be disappointed with his dismissal too, tricked into an inside edge onto his own stumps by an inswinger from Paul Collingwood for 33.
Johnson and Hilfenhaus's aggressive rearguard, however, spared Australia's blushes and delighted the home fans, particularly when both slugged sixes in one three-ball spell.
Once Tim Bresnan had removed Johnson's off stump, however, it was only a matter of time and Hilfenhaus duly fell, well caught behind for 34 after getting a nick on a short delivery from Anderson.
"The momentum had definitely swung towards the Australians and Straussy and Cooky took it right back," said Johnson, who finished with 4-66.
