Australia will face co-hosts New Zealand in the World Cup final this weekend after securing a 95-run victory over holders India in the semi-final at the Sydney Cricket Ground.

The Aussies went into bat first, but they began with a wobble when big-hitter David Warner was taken out by Umesh Yadav for just 12 after three overs.

Steven Smith top-scored with 105 off 93 balls, while Shane Watson and captain Michael Clarke mustered 28 and 10 runs respectively as Australia scored 328-7 in 50 overs.

In reply, openers Rohit Sharma and Shikhar Dhawan put on a decent partnership, but India could have been two wickets down inside four overs after some nervous moments in the field.

In the first over, Watson was convinced that he claimed a catch at first slip off Mitchell Starc's delivery, but the umpire declared not out as the Australian's fingers were not deemed under the ball as it hit the ground.

Watson was left furious, but Australia missed an opportunity moments later when Brad Haddin dropped a catch off Josh Hazlewood's delivery, allowing Dhawan to breathe again.

Sharma and Dhawan scored a combined 76 runs before the latter was taken out by Hazlewood for 45, and it wasn't long until Mitchell Johnson put a wicket on the board as he dismissed Virat Kohli for just one after the batsman pulled the ball straight into the air.

The momentum swung in Australia's direction as Johnson impressed with the ball again by bowling out Sharma, who hit 34 runs off 48 balls, while Suresh Raina (7) and Ajinkya Rahane (44) eventually followed, leaving MS Dhoni to rebuild for India.

With 70 balls remaining in the innings, India needed 143 runs to win, and while Dhoni managed to hold off Australia's bowlers, Ravindra Jadeja (16) was not as fortunate as he was run out by a stunning throw from Smith.

After losing his partner, Dhoni ramped up the attack by scoring two consecutive sixes, but his positive term at the crease was ended with a run out by Glenn Maxwell and he was forced back to the pavilion after hitting 65 off as many balls.

Wickets began to tumble and James Faulkner was on a hat-trick after he dismissed Ravichandran Ashwin (5) and Mohit Sharma for a duck, but he finished the innings with three wickets, while Starc rounded off his two-wicket haul by bowling Yadav out for a duck.

Only Dhoni reached a half-century as India were all out for 233 with 4.5 overs remaining.