England (3) 17
Try: Watson Cons: Farrell Pens: Farrell 2
Australia (17) 33
Tries: Foley, Giteau Cons: 3 Pens: 4
England are out of the World Cup after being torn apart by a superb Australia display at a stunned Twickenham.
Two converted first-half tries in a virtuoso display from fly-half Bernard Foley and four penalties from his boot brought a richly deserved win on a black night for the men in white.
The result means both Australia and Wales are into the quarter-finals.
It is the first time in history that a host nation has gone out at the group stage of the tournament.
And to complete their humiliation, it is also the first time England have ever failed to make the knock-out stages.
For England coach Stuart Lancaster it has been an awful World Cup, and questions will now be asked about his position, long-term contract or not.
His side have decelerated into this tournament and his selections fallen flat, his captain Chris Robshaw overwhelmed by the double-teaming David Pocock and Michael Hooper at the breakdown.
The Wallabies meanwhile will march on, as impressive on this night as any side so far and delighted to take revenge for defeat by England in their last three World Cup meetings.
England started uncertainly and only a desperate tackle from last man Mike Brown on Israel Folau denied the Wallabies an early try.
Folau then spilled a cross-kick on the try-line as he out-jumped Anthony Watson before both sides exchanged penalties, but on 20 minutes a series of yellow-shirted drives deep into England's 22 prised open the safe door.
England were stretched, Will Genia spotted a mismatch down the right and Foley stepped between Joe Launchbury and Ben Youngs before skipping inside Brown to dive over the line.
Twice England lost promising attacking positions on the opposition 22 to rapacious Australian turnovers, and five minutes before half-time they were torn open once again.
Off quick ball Foley accelerated onto Genia's pass, found Kurtley Beale on his inside shoulder and exchanged quicksilver passes to go clear for his second try, the conversion making it 17-3 at the break.
England were in quicksand, the Wallabies on fast-forward. No team has overturned a 14-point deficit in Rugby World Cup history, and when Foley's second penalty made it a 17-point lead the game looked gone.
But with George Ford on at fly-half - winger Jonny May's injury saw England shuffle everyone from Owen Farrell out one spot - England at last began to probe, and when Watson powered through two defenders down the right with 25 minutes left and Farrell landed the conversion from out wide there was at last hope.
England's replacements were making a difference, a Ford kick ahead setting up a Farrell penalty that made it 20-13 with 15 minutes to go.
But Farrell was then sin-binned for a dangerous tackle, with replacement Sam Burgess lucky not to be yellow carded for a worse hit milliseconds later, and Foley drilled over the penalty to kill that precious momentum.
Wallabies fly-half Bernard Foley has sometimes been criticised for lacking the flair of his rival Quade Cooper, but he ran the show for his side and outshone his opposite number Farrell.
England: Mike Brown; Anthony Watson, Jonathan Joseph, Brad Barritt, Jonny May; Owen Farrell, Ben Youngs; Joe Marler, Tom Youngs, Dan Cole, Joe Launchbury, Geoff Parling, Tom Wood, Chris Robshaw, Ben Morgan.
Replacements: Rob Webber, Mako Vunipola, Kieran Brookes, George Kruis, Nick Easter, Richard Wigglesworth, George Ford, Sam Burgess.
Australia: Israel Folau; Adam Ashley-Cooper, Tevita Kuridrani, Matt Giteau, Rob Horne; Bernard Foley, Will Genia; Scott Sio, Stephen Moore, Sekope Kepu; Kane Douglas, Rob Simmons; Scott Fardy, Michael Hooper, David Pocock.
Replacements: Tatafu Polota-Nau, James Slipper, Greg Holmes, Dean Mumm, Ben McCalman, Nick Phipps, Matt Toomua, Kurtley Beale.
Referee: Romain Poite (France)