England's Chris Tremlett (C) celebrates with teammates after bowling out Australia's Mitchell Johnson during the fourth day of the fourth Ashes cricket test at the Melbourne Cricket Ground December 29, 2010.

England won the fourth test in Melbourne by an innings and 157 runs on Wednesday to retain the Ashes on Australian soil for the first time in 24 years.

The victory, sealed before lunch on the fourth day, gave holders England a 2-1 lead in the series, which will be completed with the fifth and final test in Sydney next week.

The England players embraced and pumped their fists in the air upon the final wicket as thunderous cheers rang out from England's "Barmy Army" of supporters who had sung joyously throughout the morning at the Melbourne Cricket Ground.

Australia had resumed on 169-6, still facing a 246-run deficit to make England bat again but lost their remaining wickets shortly before lunch to be all out for 258.

Chris Tremlett removed Mitchell Johnson for six in the second over of the morning, the Australian paceman pushing half-heartedly at a fuller delivery that took an inside edge before crashing into off-stump.

Peter Siddle defiantly slogged his way to 40 before belting a lofted drive off Graeme Swann straight to Kevin Pietersen at long on.

The injured Ryan Harris did not take his place leaving Ben Hilfenhaus to take the crease. The paceman was out to Tim Bresnan for a fourth-ball duck, caught behind to wicketkeeper Matt Prior to complete the innings.

Brad Haddin enjoyed a swashbuckling partnership with Siddle, striking four boundaries and a six off Graeme Swann, but was left stranded on 55 not out.

Andrew Strauss's team became the first to retain the Ashes in Australia since Mike Gatting lead the tourists to a 2-1 series win in 1986/87, the decisive victory also sealed at the MCG.

England's Tim Bresnan (R) appeals unsuccessfully for the wicket of Australia's Mitchell Johnson (C) during the fourth day of the fourth Ashes cricket test at the Melbourne Cricket Ground December 29, 2010.

Tim Bresnan, called into the side for Steve Finn, was the pick of England's bowlers in the second innings, finishing with 4-50 after ripping through Australia's top order after tea on day three to quash the hosts' slim hopes of salvaging the test.

The win was a stunning turnaround from the third test in Perth, where England slumped to a 267-run defeat in the third test in Perth that levelled the series 1-1.

Australia's resurgence on the fast WACA wicket proved little more than a mirage when their batsmen, brittle throughout the series, were skittled for a first innings total of 98, a record low against the tourists at the MCG.

England pressed the advantage by romping to 157 for no loss on the first day and anchored by a sublime unbeaten century by Jonathan Trott, who was named man of the match, posted a first innings total of 513 on day three.

That gave the hosts a 415-run deficit to make England bat again and any hope of a fightback was quashed after tea when Australia's top order were blown away by Bresnan.

They limped to 169 for six at stumps and the victory early on day four for England was all but a formality.