Australia have ended day two of the third Test match with Sri Lanka on 342-6 as they opened up a lead of 48 runs.

After bowling Sri Lanka out for 294 at the close of play on day one, David Warner and Phillip Hughes dominated with the bat in the morning session to take Australia to 127-1 at lunch.

Both players failed to make it into triple figures, with Warner falling for 85 and Hughes being dismissed for 87, but Australia reached tea just 53 runs short of Sri Lanka's total.

Michael Clarke reached a 25th Test 50 in the final session of the day but Sri Lanka continued to work hard in the field, taking three wickets in the process.

However, Matthew Wade ground out a hard-fought 47 to remain at the crease until the close of play to keep his side in the ascendency.