England have a lead of 264 runs over Australia, despite losing three late wickets on day two of the second Ashes Test at Lord's.

The hosts were bowled out for 361 earlier in the day but in response they bowled the Australians out for 128, before making 31-3 in their second innings by the close of play.

Australia began the day brightly by bowling England out, with Ryan Harris taking five wickets.

Opening batsmen Shane Watson and Chris Rogers put on 42 for the first Australian wicket, before Watson fell lbw to Tim Bresnan just before lunch.

Rogers went shortly after play resumed, caught lbw by Graeme Swann.

Phil Hughes was caught then behind by Matt Prior off Bresnan, before Swann took the wickets of Usman Khawaja (14) and Steve Smith (2) in quick succession as England began to dominate the afternoon session.

Broad trapped Australia captain Michael Clarke (28) lbw and Ashton Agar was run out by Prior to leave the tourists on 96-7 at tea.

James Anderson claimed the wicket of Peter Siddle after the break, before Swann claimed a five-wicket haul with the dismissals of Brad Haddin (7) and Harris (10).

Australia gave themselves hope as Peter Siddle took three quick wickets in the early stages of England's second innings.

Alastair Cook and Jonathan Trott dragged deliveries onto their stumps, before Kevin Pietersen was caught by Rogers at point.

England will resume on day three with Joe Root (18*) and Bresnan (0*) at the crease.