Sri Lanka, riding on its Test series win over Pakistan, leveled India (119) on points but replaced Mahendra Singh Dhoni's team at number three after re-calculation upto the nearest decimal -- 0.01 ratings points difference.
Australia (124) clung on to the top above second-placed South Africa (122) as just five ratings points separate top four teams.
But Ricky Ponting's men must win both the remaining Ashes Tests to stay there. Otherwise, it will be Graeme Smith's turn to lead the number-one Test team in the world.
Australia has led the Test rankings ever since the current method was introduced in May 2003.
The progress of Kumar Sangakkara's team is due to a consistently high performance during the period of the rankings. In that time, the team has played 10 series, winning six, drawing three and losing just one (in Australia).
No matter how the Ashes finishes, England (99) will remain in fifth position but if the home side wins the series, Australia will drop to fourth position in the Test Championship table.

If the series ends in a 1-1 draw, South Africa will rise to the top. Australia, Sri Lanka and India will all have the same rating, but with Australia still clinging on to second place by a decimal point.
In the batting list, Gautam Gambhir remained on second spot with 847 points behind Sri Lanka captain Kumar Sangakkara (862).
Sachin Tendulkar (15th), VVS Laxman (17th) and Virender Sehwag (19th) are the other Indian batsmen in the top 20.
Among bowlers, Harbhajan Singh and Zaheer Khan are in top 10 at sixth and ninth respectively while Ishant Sharma is in 19th in the list headed by South African Dale Steyn.
The annual update is carried out to ensure the ICC Test Championship table continues to reflect recent form with older results being discarded.
The table reflects all Test series that were completed since August three years ago. All series played until the start of next August will be added to this table, so by then the ratings will be based on four years of results, with series completed within the last two years carrying greater weight.
Next August the first year of results will be dropped and this pattern is repeated each August, with the oldest of the four years of results removed to be gradually replaced with results of series completed over the following 12 months.
Thus, once a year, the rankings change overnight without any new series being completed.