The Australian men's basketball team rallied from a huge deficit to defeat New Zealand 79-78 in Hobart to retain the Ramsay Shield and provide a timely boost ahead of next month's world championships.

Kiwi guard Kirk Penney had a chance to tie the game with 4.4 seconds left when the visitors trailed by three points, but he missed all three free-throw attempts and Australia snuck home.

The Boomers, who suffered a record 19-point loss in game two of the four-match series, trailed by the same margin in the second term and appeared likely to cop another embarrassing defeat.

But veteran Jason Smith brought the home side back with some outstanding long-range shooting to ensure the Shield stays with holders Australia ahead of game four in Melbourne on Wednesday.

The Boomers, who have lost just one series to their old rival since the series began in 1971, appeared to suffer stage fright early on in front of a packed house, trailing 29-12 after the first quarter.

Australia was still down 65-60 at three-quarter-time, but the new-look home side - which contains four debutants - rallied down the stretch for a morale-boosting win.

Both teams are preparing for the world titles, which commence in Japan on August 19.

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