After securing a first-innings lead of 74 thanks to a landmark six-wicket display from captain Pat Cummins, Australia struggled to 8-144 at stumps on day two in a match that is on track to be over within three days.
Fourteen wickets tumbled on Thursday, after 14 had already fallen on a dramatic opening day.
But wicketkeeper Alex Carey (43) and star quick Mitchell Starc (16no) were able to steady Australia late in the day to push their advantage to 218.
The pair put on a crucial 61-run stand, after the reigning WTC title holders had slumped to 7-73.
Kagsio Rabada (3-44), however, had one last spell in him and was able to dismiss Carey for his eighth wicket of the Test.
Starc was then dropped by towering Proteas quick Marco Jansen in the slips two balls before stumps.
Australia's lead could already still be enough after South Africa were rolled for just 138 in their first innings.
Only four teams have successfully chased a target of more than 200 in a Test at Lord's.
In seven overs of chaos after tea, unheralded Proteas pacer Lungi Ngidi (3-33) steamrolled Australia's middle-order in stunning fashion to boost the chances of a boilover.
Left-armer Jansen, who appeared to hurt his finger in the field, removed Marcus Labuschagne in the second failure of his first Test as an opener.
Having not played a Test since September, Ngidi then took the prized wicket of Steve Smith, before taking care of Beau Webster and Cummins.
Earlier, Cummins had demolished South Africa with 6-28, becoming the eighth Australian to take 300 Test wickets.
The evergreen fast-bowling machine of Cummins, Josh Hazlewood, and Mitchell Starc proved too good for the batting of South Africa, who had ended the WTC cycle on top of the table.
While Starc started the destruction on Wednesday evening, Cummins was relentless in finishing the job with the 14th five-wicket haul of his brilliant 68-Test career.
The first paceman to captain Australia long-term, Cummins joins the country's greats in reaching 300 wickets.
Shane Warne (708 wickets) and Glenn McGrath (563) sit one and two, while Cummins' teammates Nathan Lyon (553) and Mitchell Starc (384) are next in line.
Dennis Lillee (355), Mitchell Johnson (313) and Brett Lee (310) are the others to take more than 300.
Out of those eight, only McGrath has a better average (21.64) than Cummins' 22.08.
"It's way more than I could've asked for," Cummins said.
"For any fast bowler, 300 is a big number, it means you've battled a few injuries and niggles and got through it."
The 32-year-old also finished with the best figures by a captain at Lord's, bettering England's Bob Willis' 6-101 in 1982.
One of Cummins' six victims was Kyle Verreynne, who had to go after being trapped lbw.
As Cummins was pedalling backwards while appealing, he and Verreynne collided with each other and tumbled over.
The umpire gave the South Africa wicketkeeper not out, but Cummins successfully appealed.
David Bedingham (45) top scored for South Africa, while Proteas captain Temba Bavuma survived a controversial DRS decision.
Adjudged lbw on 16 off Josh Hazlewood, Bavuma left it late to review, but eventually took the decision upstairs with four seconds remaining.
The ball would have been smashing into the stumps, but a spike on snicko incredibly meant Bavuma had survived.
Former England captain Alastair Cook said during radio commentary he didn't believe Bavuma had hit it.
But after looking promising, highlighted by pulling opposing captain Cummins for six, Bavuma (36) scooped a drive to cover where Labuschagne pulled off a terrific diving catch.
Victory in only the third WTC final would ensure Australia have landed four ICC trophies since November 2021.
But South Africa are refusing to throw in the towel, having not won an international title since the 1998 Champions Trophy.
This AAP article was made possible by support from Amazon Prime Video, which is broadcasting the World Test Championship final.
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