The atmosphere at the King Abdullah Stadium in Amman was electric after outsiders Jordan, thrashed 6-0 by Japan in June, claimed an unlikely win thanks to second-half goals by Hassan Abdel-Fattah Mahmoud and Amer Deeb.
Australia pulled a goal back through substitute Archie Thompson late on but poor finishing and frantic defending allowed Jordan to claim the memorable win.
Jordan are now in second place on four points in Group B and in one of the pool's two automatic qualifying berths for a place at the finals in Brazil in 2014.
Australia have two points from three matches and are level with Iraq and Oman in the standings, eight points behind Asian champions Japan.
"The disappointment is enormous," Australia coach Holger Osieck told Fox Sports. "We had a very, very poor first half.
"We didn't get into the game, our passing was a disaster, we never could get into our normal rhythm. We played a lot of long balls and I don't know why that happened."
The Socceroos next face a tricky trip to Qatar to play 2007 Asian champions Iraq and will have to show far more fight and creativity if they want to reach the finals in Brazil.
Towering Socceroos defender Sasa Ognenovski had to leave the field after only 14 minutes with an injury, forcing Osieck into an early reshuffle and Jordan's high-tempo game unsettled the Australians without creating clear chances.
That changed in the 48th minute when Jordan forward Odai Al-Saify skipped down the left and was felled in the penalty area as he cut back inside Mile Jedinak.
Qatari Abdullah Balideh gave the penalty despite the theatrics of Al-Saify who kissed and smacked the turf in delight before Mahmoud slotted the spot-kick past goalkeeper Mark Schwarzer.
Jordan retreated and allowed Australia to dictate play before the home side produced a stunning counter to grab a second.
Al-Saify led a breakout and skipped around Lucas Neill before cutting the ball back for Deeb to fire in at the near post in the 77th minute.
The Australians, who slumped to a 0-0 draw away to Oman in their opening qualifier, were rattled and Jordan should have had a third but Deeb clipped his shot just over the bar.
Jedinak smacked the post with a long-range drive as the visitors struggled to find the creative spark required and relied on hopeful balls into the area.
Substitute Thompson, who once scored 13 goals in a World Cup qualifier against American Samoa, pulled one back for the visitors with five minutes to go after he fired a right foot shot past Shafia.
The goal set up a nervy finale with AFC Vice-president Prince Ali Bin Al-Hussein amongst those home fans unable to watch. But after Robbie Kruse wasted one good chance, Jordan held firm and the world's 87th-ranked side claimed the unlikely win.
"We can't afford many slip-ups now," Neill said of their bid to reach a third consecutive finals. "We've got to pick the team that will do the job in each game now.
"We've got to keep believing and stay positive. There's plenty of points to play for. But if we perform like we did tonight it's going to be difficult."
Elsewhere, Japan survived early pressure from Zico's Iraq to beat them 1-0 at home, taking a significant step towards qualifying for the 2014 World Cup.
Ryoichi Maeda steered in a point-blank header in the 25th minute for the Asian champions, who lost playmaker Shinji Kagawa to a back strain an hour before kick-off.
Iraq, shock Asian Cup winners in 2007 and now under the stewardship of former Japan coach Zico, could have scored twice before Maeda struck, both times having close-range efforts blocked.
A diving header from Keisuke Honda was brilliantly tipped against the post by goalkeeper Noor Sabri in the second half.
Lebanon recorded one of their greatest victories when they stunned three-times Asian champions Iran 1-0 in Beirut to throw open World Cup qualifying Group A.
Roda Antar was the match winner, with the creative midfielder's 28th-minute strike the first goal Lebanon, ranked 124th by FIFA, had scored against their more illustrious opponents in this their eighth meeting.
His team-mates then defended bravely and wasted time much to the irritation of Iran, who struggled badly on the atrocious pitch which lacked grass in several areas as the home side claimed the landmark win.
Lebanon, competing in the fourth round of Asian World Cup qualifying for the first time, now have four points from four matches in the five-team pool, level with Iran and Qatar who have played one game fewer.
Earlier, South Korea held on to their lead at the top of the pool by drawing 2-2 away to Uzbekistan. The Koreans lead the way on seven points with Iran second on goal difference in the group's other qualifying berth for Brazil 2014.