Two stage wins for Jari-Matti Latvala cut Kris Meeke's Rally Australia lead as Volkswagen dominated the second run of Friday stages.
Triumphs through Bellingen (10.7km) and Newry (24.91km) along with a second place finish on the fourth stage saw the Finn cut the Citroen driver's early lead to just 2.1 seconds.
Volkswagen won all three afternoon stages with reigning world champion Sebastien Ogier pipping Latvala by half a second through SS4 Hydes Creek to climb to third overall.
While Volkswagen ignited their Rally Australia push, Citroen's Meeke began to lose fractions of his advantage after finishing sixth at the end of Hydes Creek.
However, the Northern Irishman fought back to claim fourth and third in the following stages to maintain his slender advantage.
The third Volkswagen of Andreas Mikkelsen is just 5.2s adrift of Ogier in fourth having dropped time to both of his team-mates.
The Kiwi profited from an error by Hyundai stablemate Thierry Neuville, who lost nearly to minutes in SS5 after damaging his rear suspension in a minor scrape with the scenery.
As a result, the Belgian dropped to 10th in the rally standings.
Neuville wasn't the only Hyundai to hit trouble as Australia's Chris Atkinson complained of a problem with the rear of his car, which forced him to back off during the Newry stage.
The 34-year-old has subsequently slipped outside the top 10 in 11th spot.
The Coates Hire Rally Australia continues with two Super Special stages held in Coffs Harbour tonight.
Coates Hire Rally Australia Leading Positions after SS6