Replacement flyhalf Ben Donaldson had the chance to convert a late Australian score for the win, but put his effort wide of the posts to signal jubilant celebrations from the Italian players.

Winger Pierre Bruno also scored a try for Italy, who were full value for the victory and might have won by a greater margin had they not missed out on 14 points with kickable penalties and conversions.

Australia scored tries through winger Tom Wright, flanker Fraser McReight, prop Tom Robertson, and locks Cadeyrn Neville, but gave away too many penalties through indiscipline and were poor on their own set pieces when in attacking positions.

"It means a lot for the boys, they grafted hard all game and we dug deep," Welsh-born Italy scrumhalf Stephen Varney said at the post-match presentation.

"We are building well, we have very good coaches. We are proud to be part of this team and have great leaders."

"Capuozzo is an amazing payer, he has turned up all year and put in strong performances. I’m really happy for him."

The loss compounded a miserable year for Australia in which they have lost eight tests, piling the pressure on head coach Dave Rennie 10 months out from the World Cup in France next year.

They face Ireland next Saturday and complete their autumn series against Wales. Italy host South Africa next week.

The Wallabies came up against a fired-up Italy, who have been much improved since New Zealand-born coach Kieran Crowley took charge and they matched their visitors in the physical battle and applied pressure on their set pieces.

The visitors were not accurate enough when they did have chances to score, notably from attacking line-outs having turned down relatively simple shots at goal from penalties.

Discipline has been the Wallabies' Achilles heel this year and it was again the case as they gave away 16 penalties and had a yellow card for scrumhalf Jake Gordon.

Italy, who led 17-8 at halftime, scored two of their three tries while he was in the sin bin.

But despite their poor performance, Australia might still have won it when Neville crossed for a try after the hooter, but Donaldson could not direct his pressure conversion on target.

"The boys are extremely disappointed," Australia captain Allan Alaalatoa told reporters. "Turnovers really hurt us, especially the ones that we can control. That was the difference in the game."