South Africa is on course for a scarcely believable victory over Australia in the first test after the tourists threw away a 188-run lead on Thursday to be bowled out for 47 in their second innings.

Australia's dramatic and near record-breaking collapse, less than two hours after it had skittled South Africa for 96, left the Proteas needing 155 more runs with nine wickets in hand at stumps after a chaotic second day.

The game swung dramatically in both directions at Newlands as the wickets flew on an incredible afternoon, before South Africa emerged in a winning position despite surrendering a large first-innings deficit.

Graeme Smith (36 not out) and Hashim Amla (29 not out) guided South Africa to 88-1 at the close of a day in which 23 wickets fell at Newlands - the most in a day of test cricket in more than 100 years.

It was also only the second time in tests where there has been play in all four innings.

Michael Clarke's majestic 151 that guided Australia to 284 in its first innings earlier in the morning was forgotten as his team slumped spectacularly for its lowest score in 109 years in a stunning turnaround in the match.

Australia even needed a desperate last-wicket partnership of 26 runs to avoid the record for the all-time lowest team total.

No. 11 Nathan Lyon top-scored with 14 and Peter Siddle was next with 12 not out to save Australia from 21-9 - just five runs off the worst score in test history, when New Zealand was bowled out for 26 by England in 1955.

The total was still Australia's fourth worst in history, only nine runs more than its record low of 36, set against England in 1902.

Debutant seam bowler Vernon Philander took 5-15 and Morne Morkel 3-9 to blast out the tourists in their second innings and restrict their lead to 235.

Australia began the crazy day by resuming on 214-8 in its first innings before the match swung dramatically - in both directions - in the afternoon.

Clarke made 151 off 176 balls - the only batsman in the match so far to pass 50 - to lead Australia to 284 all out, and South Africa appeared to have recovered from the early loss of opener Jacques Rudolph to go to lunch on 49-1.

But Shane Watson unleashed a devastating five-over spell after lunch by taking 5-17 as Australia ripped South Africa out for just 96 for a commanding first-innings lead of 188.

South Africa lost 9-47 in just 11.3 overs after lunch with Ryan Harris contributing 4-33 as a tumultuous afternoon for batsmen began.

Allrounder Watson fell third ball of Australia's second innings, and Ricky Ponting and Phil Hughes were also out as 12 wickets went down for both teams in less than 19 overs between lunch and tea.

Australia's post-tea collapse was even more dramatic, sudden and unexpected.

Mike Hussey, Michael Clarke and Brad Haddin fell within five runs of the restart and Australia was reeling at 21-9 in the 12th over under relentless pressure from Philander, Morkel and Dale Steyn (2-23).

Cricket's most revered team was in danger of the worst score ever in the five-day format, just 90 minutes after taking complete control of a game against one of its fiercest rivals.

An outside edge from Siddle down to the third man boundary saved that embarrassment as the Aussies went past 26. The two tailenders - the only two to reach double figures in the innings - then also dragged their team past its own worst score of 36 all out.

Lyon fell after driving Steyn straight to AB de Villiers in the covers as Australia collapsed in just 18 overs on a turbulent day of test cricket.

Even though Rudolph again fell early in South Africa's second innings – to make it 20 wickets in two sessions - Smith and Amla shared a measured 54-run stand to finally bring some sanity to a crazy afternoon and set the home team on course for a completely unforeseen victory.