Each of the England top four contributed to their dismissals while the Australians, who decided to omit off-spinner Nathan Hauritz for the second Test in succession, bowled with sustained aggression and control. Peter Siddle was the pick of the bowlers with four for 63.
With the series tied at 1-1, England need to win the final test to reclaim the Ashes from Australia, who need only a draw.
There were consolations for the hosts in the form of Ian Bell, who top-scored with 72 after moving up a place to number three, and debutant Jonathan Trott who made a composed 41.
England can also take heart from the Oval pitch, which after being left open to the elements on the hottest day of the year on Wednesday, was already offering assistance to part-time spinner Marcus North.
But overall Australia will be the happier of the two teams after a full day's play.
Andrew Strauss won his fourth toss of the series and play began under menacing black clouds, which rolled away during the morning session and gave way to bright sunshine after tea.
Andrew Flintoff (7), who was given a standing ovation in his final Test, slashed Mitchell Johnson to Brad Haddin. Trott's promising innings was cut short when he was brilliantly run out by a direct hit at the batsman's end by Simon Katich.
Scoreboard
ENGLAND (I Innings)
Strauss c Haddin b Hilfenhaus 55
Cook c Ponting b Siddle 10
Bell b Siddle 72
Collingwood c Hussey b Siddle 24
Trott (run out) 41
Prior c Watson b Johnson 18
Flintoff c Haddin b Johnson 7
Broad (batting) 26
Swann c Haddin b Siddle 18
Extras: (B 12, LB-4, W-3, NB-17) 36
Total: (for 8 wkts; 85.3 overs) 307
Fall of wicket: 1-12, 2-114, 3-176, 4-181, 5-229, 6-247, 7-268, 8-307.
Bowling: Hilfenhaus 19-5-59-1, Siddle 18.3-6-63-4, Clark 14-5-41-0, Johnson 15-0-69-2, North 14-3-33-0, Watson 5-0-26-0.
