Australia have needed only 11.4 overs on the final day of the second Test to take England's remaining four wickets and claim a two-nil lead in the Ashes series.
Resuming on 6-247 chasing 531 to win, England were bowled out for 312 under overcast skies at Adelaide Oval.
Paceman Peter Siddle led Australia's second innings attack with 4-57 and Ryan Harris took 3-54.
England must now lick their wounds ahead of a quick turnaround for the third Test on a bouncy WACA pitch in Perth starting on Friday.
In a promising sign for England, wicketkeeper/batsman Matt Prior recovered from his double failure in the first Test, completing a fine knock of 69 on Monday, including 12 fours off 102 balls.