Travis Head scored 163 and Steve Smith became the second-most prolific Ashes run-scorer of all time on the way to his century as Australia took a first-innings lead of 134 on the third day of the fifth test against England on Tuesday.

Already 3-1 up in the series with the urn secured for another 18 months, Australia finished the day on 518 for seven with Smith 129 not out and Beau Webster unbeaten on 42.

Head's century, brought up off 105 balls, was his third of the series, while skipper Smith hit the hundred mark for the 13th time in his 41 Ashes contests.

There was disappointment, however, for Usman Khawaja, who received a rapturous reception from the Sydney Cricket Ground crowd as he came out to bat in his final test before retirement but managed only 17 runs before falling to a full toss.

Sydney has offered the most bat-friendly surface of the series and it was heavy work in blazing sunshine for the England bowlers, especially in the final session when the shine had worn off the second new ball.

England seamer Matthew Potts came in for particularly heavy punishment from the Australian batsmen in his first match in the series, going for 141 runs from 25 overs.

Head made the most of the old ball at the start of the day when, resuming on 91 with Australia 166-2, he attacked with a relish that has become his trademark since moving to the top of the order in Perth.

He hammered a four through the covers for his 12th test century before raising his helmet aloft on the handle of his bat and taking Australia to lunch at 281-3.

Brydon Carse (3-108) had finally dismissed Michael Neser for 24 but only after the nightwatchman had faced 90 balls and England had burned their final DRS review in a failed attempt to remove him.

Head dropped cold on the boundary

That brought Smith to the crease and he put on 54 for the fourth wicket with Head before the opener, who had been dropped cold on the boundary by Will Jacks on 121, perished attempting to sweep Jacob Bethell's occasional spin.

"The game's been good to me for a couple of weeks," said Head.

"Bit of luck here and there. I've liked the new ball. I've liked the ball coming on, harder ball, catchers behind the wicket and opportunities to score is something that I've always liked."

Khawaja and Alex Carey, who scored 16, came and went as England got something out of the new ball but Smith batted on, firing a four past the bowler to reach the 50-mark for the 45th time.

Australia were just seven runs behind England's tally of 384 at tea and quickly overhauled it after the break.

All-rounder Cameron Green put on 71 for the seventh wicket with Smith before departing for 37 courtesy of an ill-judged shot that ballooned to Ben Duckett at square leg.

Smith, fidgeting and adjusting his equipment in customary fashion between deliveries, moved inexorably towards the century mark, however, getting over the line by scurrying for three runs.

The 46,161-strong crowd, clad in pink for the annual Jane McGrath charity day, rose to their feet as one to celebrate a 37th test hundred from one Australia's greatest batters.

The 36-year-old had already passed Jack Hobbs on the list of highest run scorers in Ashes tests, his tally of 3,683 against England now trailing only the great Donald Bradman (5,028).

"It was a tough day but that's what it's about," said Bethell.

"We've got to come out tomorrow, take those three wickets early and get back in it again. Everyone's still very driven to leave Australia 3-2 (down)."