Lewis Hamilton and Jenson Button finished one-two in a rain-affected session at the Albert Park street circuit, with 2008 world champion Hamilton edging out his team-mate and being the only man to post a sub 1:26 lap time.
There was good news for Australian fans too, with Mark Webber third fastest ahead of seven-time world champion Michael Schumacher.
Hamilton was pleased to be up the front early in the weekend.
“We've definitely made some improvements from Bahrain,” Hamilton said.
“We're comfortable going into qualifying we'll be able to attack the guys at the front. I'm relaxed, it's a good car and it feels better than it's ever felt here at this track which is a major positive.”
Button later rued a slow-running Pedro de la Rosa for baulking him on his last run at a fast lap.
“I had a lot of traffic – the last seven laps I didn't get a clear lap once. It's frustrating,” Button said.
“Pedro at the end was in the way coming out of a quick left-right. It was obviously a pretty dangerous place. I've spoken to Pedro.”
Renault showed some encouraging pace, with Russian rookie Vitaly Petrov finishing the session in fifth place, while his experienced team-mate Robert Kubica was fastest in the first practice session. Kubica was 11th in the second session.
Bahrain Grand Prix winner Ferrari was down in the teens. Team drivers Fernando Alonso and Felipe Massa finishing the session 15th and 17th respectively with Webber's Red Bull team-mate Sebastian Vettel in 16th.
The third and final practice session will run tomorrow morning before qualifying at 5pm.