Paceman James Anderson removed dangerous opener David Warner for nine before all-rounder Ben Stokes dismissed number three Shane Watson for 10 shortly before the break.
Australia captain Michael Clarke (two not out) and opener Chris Rogers (16 not out) negotiated a tense few minutes to the end of the session under brilliant sunshine in front of a crowd of more than 64,000 at the Melbourne Cricket Ground.
The early wickets will give the tourists some hope of restricting Australia and salvaging some pride after they lost their last four batsmen for the addition of only 29 runs.
Clarke's surprise decision to send his team into the field after winning the toss was validated as England, having resumed on 226-6, crumbled in less than an hour in the morning in the face of another hostile spell from seamer Mitchell Johnson.
Johnson continued the scintillating form that has helped the hosts carve an unassailable 3-0 series lead when he captured three quick wickets to finish with figures of 5-63, his new ball spell reaping a devastating 5-18 in nine overs.
Warner lived dangerously for his nine runs, slashing indiscriminately at almost everything before skying a simple catch behind the wicket for keeper Jonny Bairstow, who replaced the dropped Matt Prior.
Watson, who suffered a groin injury on day one, was also caught behind by Bairstow for 10 after edging a Stokes delivery.
Johnson earlier struck in the second over of the morning with his first ball to remove Tim Bresnan for one, the all-rounder fending off a venomous, rising ball to give a scrambling George Bailey a simple catch at square leg.
Johnson then bowled Kevin Pietersen for 71 four balls later when the South Africa-born batsman swiped across the line in a horrible attempted slog that will do little to silence his detractors.
Stuart Broad came out swinging, smacking a pair of boundaries off Ryan Harris before nearly being caught and bowled by the seamer when on 10.
The 32-year-old Johnson then roared in to trap Broad in front for 11, in almost exactly the same fashion as the dismissal that saw the paceman suffer a foot injury in the third test in Perth.
Number 10 Anderson showed some defiance to block out Johnson and smacked Nathan Lyon over his head for four but the spinner soon captured the final wicket of Monty Panesar for two.
Man of the match in the first two tests, Johnson now has 10 five-wicket hauls in tests, with five coming against England and three in this series.
"It's going alright," Johnson said in a pitchside interview. "I'm enjoying it. I can't take full credit for that. We bowled really well as a unit yesterday. We keep sticking to our plans and it's coming off.
"It was nice to get a wicket with my first ball, Ryan-o (Harris) set it up for me, hopefully the batters can go out there and make a few runs and I can put my feet up.
"The wicket looks good and obviously Michael's (Clarke's) call to bowl first was the right choice."
The final match of the five-test series starts in Sydney on Jan. 3.