Wales produced a brave performance at Sydney's Telstra Stadium in front of a crowd of over 63,000 before eventually falling 10-30 to the World Cup holders.
Steve HansenÂ´s side went behind early to two Wendell Sailor tries, but showed grit and perseverence to come away with a creditable preformance.
Wales captain Martyn Williams said. 'I think we showed a few people we can play a bit. We've got some good young players, things are looking good.'
After the early setbacks, Wales contained the home side, and Stephen JonesÂ´ 20th minute penalty goal gave Wales a presence on the scoreboard.
The Australians rallied, but stout defending from the visiting front eight kept the Wallabies in touching distance, with Chris LathamÂ´s try in the corner making the halftime score 18-3 to Australia.
But Wales came out fighting in the second half, and when centre Jamie Robinson's early second half try narrowed the gap to eight points, the visiting supporters found an extra notch of volume, and for a moment, the belief that a victory was possible.
However, late efforts from Wallaby hooker Jeremy Paul and replacement centre Nathan Grey gave the home side a 20-point victory they will be satisfied with.
For Wales, Pontypridd forwards Robert Sidoli and Gethin Jenkins produced immense games, while the backrow of Colin Charvis, skipper Martyn Williams and debutant Jonathan Thomas worked well together.
Wales play New Zealand - who lost 13-15 to England on Saturday - in Hamilton next weekend.
Australia: Tries - W Sailor 2, C Latham, J Paul, N Grey; Pen - E Flatley; Con - J Roff.
Wales: Try - J Robinson; Pen - S Jones; Con - S Jones. Halftime: Australia 18-3.
Australia: Chris Latham (Queensland Reds); Wendell Sailor (Queensland Reds), Morgan Turinui (NSW Waratahs), Steve Kefu (Queensland Reds), Joe Roff (ACT Brumbies); Elton Flatley (Queensland Reds), George Gregan (ACT Brumbies, capt); Bill Young (ACT Brumbies), Jeremy Paul (ACT Brumbies), Patricio Noriega (NSW Waratahs), Nathan Sharpe (Queensland Reds), David Giffin (ACT Brumbies), David Lyons (NSW Waratahs), Phil Waugh (NSW Waratahs), Toutai Kefu (Queensland Reds).
Replacements: Brendan Cannon (NSW Waratahs), Ben Darwin (ACT Brumbies), Daniel Vickerman (ACT Brumbies), Daniel Heenan (Queensland Reds), Chris Whitaker (NSW Waratahs), Nathan Grey (NSW Waratahs), Lote Tuqiri (NSW Waratahs).
Wales: Rhys Williams (Cardiff Blues); Mark Jones (Llanelli), Jamie Robinson (Cardiff Blues), Mark Taylor (Llanelli), Tom Shanklin (Cardiff Blues); Stephen Jones (Llanelli), Gareth Cooper (Bath); Iestyn Thomas (Llanelli), Robin McBryde (Llanelli), Gethin Jenkins (Pontypridd), Robert Sidoli (Pontypridd), Gareth Llewelyn (Neath), Jonathan Thomas (Swansea), Martyn Williams (Cardiff Blues, capt), Colin Charvis (Swansea).
Replacements: Mefin Davies (Pontypridd), Ben Evans (Cardiff Blues), Chris Wyatt (Llanelli), Alix Popham (Leeds), Dwayne Peel (Llanelli), Ceri Sweeney (Pontypridd), Gavin Henson (Swansea).