Wollongong's Flynn Ogilvie scored a shootout goal for the Kookaburras but it wasn't enough for the team to overcome Great Britain in their Pro League clash on Sunday night.
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The two teams were locked at two goals apiece at the end of regulation, with the match moving to a shootout to determine the victory.
Ultimately it was Great Britain who held their nerve, the home team taking out the shootout four goals to three.
Despite the loss, Australian coach Colin Batch said it was a match his team will take a lot out of.
"We found it difficult to establish our game in the first half, while our third quarter was very good," Batch said.
"We needed to do more with the opportunities we created and our momentum really stalled in the last quarter. There were some great lessons for us to take into our future matches in Europe."
The shootout came after a see-sawing encounter, with Australia coming from behind twice to level the scores.
It didn't take long for Great Britain to open the scoring, with Zachary Wallace finding the back of the net in just the seventh minute.
It took the Kookaburras a piece of individual brilliance to level the scores, with Jake Harvie stealing the ball deep in Australian territory and running the length of the field to score a superb goal in the 12th minute.
Great Britain hit the front for a second time midway through the second quarter, with Christopher Griffiths converting a penalty corner into a goal.
The final goal of regulation would come in the 36th minute, Tim Brand making a desperate lunge to level the scores.
Both teams had opportunities to break the deadlock throughout the final two quarters, with a number of players firing quality shots at the two goalkeepers.
Those shots were denied, with the match heading to a shootout ultimately claimed by Great Britain.
The loss marked a disappointing start to the Kookaburras European leg of the Pro League, with matches to come against Spain, Germany, Belgium and the Netherlands over the next two weeks.
Despite the loss, Australia remain in first place on the ladder as they look to secure a berth in the Pro League finals series to be held later this month.
The Australian women were also in action on Sunday night, with the Hockeyroos claiming a 4-2 victory over Great Britain.
Gerringong's Grace Stewart is in Europe with the squad, however she did not feature in the win.
A three-goal second quarter, including two in less than a minute, laid the platform for the win, although Australia were pushed all the way by their opponents.
A fourth goal in the 37th minute saw the Hockeyroos claim a 4-0 lead before Great Britain cut the gap to three shortly before three-quarter time.
A second British goal followed midway through the final term gave the hosts a glimmer of hope, however Australia's defence held firm to secure the win and remain in third place on the ladder.
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