Lewis Moody, captaining England on his 32nd birthday, was joined in the starting line-up by Leicester Tigers colleagues Dan Cole, Toby Flood and Tom Croft, with Ben Youngs and George Chuter joining the action as second-half substitutes.
Flood converted the two penalty tries won by the England scrum, and added a penalty, but tries from fly-half Quade Cooper (2) and Rocky Elsom saw the hosts home.
"You have to do the basics right and retain the ball, we didn’t do that in the first half," Moody said.
"You have to do the simple bits right, we gave them far too much ball in the first half. You can’t give the Aussies that much possession.
"There are always positives – it was a good second half, the scrum went exceptionally well, the forwards battled really hard and we created some opportunities. But you’ve got to finish them."
Tigers prop Cole was at the centre of the forward effort which was rewarded with the two penalty tries and he also went close to an individual score with one barnstorming run on the left.
Cole, winning his sixth cap after playing throughout this year’s RBS 6 Nations, said: "We had a real opportunity to take on the Australians and potentially win the game so we’re frustrated and gutted.”
Geordan Murphy gained a 67th cap for Ireland as a replacement in the opening Test of their tour Down Under, but the tourists had a day to forget as they suffered a record 66-28 defeat in New Zealand.
Marcos Ayerza and Lucas Amorosino both came off the bench for Argentina in their 24-16 home defeat by Scotland on Saturday.
Ayerza was used as a 45th-minute replacement for tighthead prop Martin Scelzo, while Lucas Amorosino came off the bench just two minutes later to win his third cap. Tigers’ new signing Horacio Agulla started on the wing for the Pumas.
England and Argentina are in action again next weekend, while Ireland face New Zealand Maori on Friday, while Martin Castrogiovanni and his Italy colleagues face South Africa.
