The Wallabies' night from hell overshadowed the selection of Phil Waugh as captain of his country for the first time for Saturday's Test against Wales at Millennium Stadium.

Flanker Waugh, a veteran of 52 Tests, will lead an Australian team with plenty of work to do after a humiliating 24-16 loss by its second string team to a depleted Welsh regional line-up in Swansea.

The Wallabies' quest for a clean sweep of their seven-match tour of Europe was spectacularly shattered at the first hurdle by an Ospreys line-up devoid of 13 frontliners at Liberty Stadium.

It was a horrid night in more ways than one for Australia with luckless flanker Hugh McMeniman taken to hospital in a neck brace, his immediate playing future in doubt.

Initial x-rays and a CT scan cleared McMeniman of a broken neck but he was nevertheless forced to spend his 23rd birthday in hospital after lasting just seven minutes in his comeback game following a shoulder reconstruction in March.

The only positive was the performance of fullback Cameron Shepherd, who set up Australia's sole try and landed four goals from five attempts to win the vacant wing spot in the Test team.

The Wallabies also lost halfback Brett Sheehan to a badly broken nose which ruled the 27-year-old out of Saturday's Test, and probably also the Test against Italy on Saturday week.

Coach John Connolly said the Wallabies faced some tough decisions after his experimental and inexperienced backline played like schoolboys for the most part of a match that would be best archived in the horror section of the ARU's video library.

Speaking frankly about the diabolical display, Connolly conceded he'd probably have to abort plans to transform Mark Gerrard into a five-eighth and that the Wallabies selectors were left wondering if the wayward-throwing Tatafu Polota-Nau's days as a hooker were numbered.

"He struggled," Connolly said of Gerrard.

"Our backline as a whole did. Every time we went wide, we couldn't hold onto the ball," Connolly said.

Polota-Nau, another highly-rated footballer, could be in for a career move after the Wallabies "lineout went pearshaped" when he had five throws stolen by the opposition.

"Polota-Nau did some great work around the field but it's just (a matter of) where do you go to with him? Do you keep persevering with him? There's big talk of that - (turning him into a prop)," Connolly said.

The Wallabies' cause wasn't helped by the sin-binning either side of halftime of lock James Horwill for a professional foul and prop Guy Shepherdson for stamping.

The injuries, defeat, poor performance and ill-discipline left Connolly scratching his head.

"We haven't played for a while but there's no excuse for just the simple mistakes they made under pressure," he said.

"It was disappointing. We were competitive at the breakdown but at no stage did we hold onto the ball to put them under any pressure.

Connolly said if not for the efforts of champion flanker George Smith, captaining Australia for the first time, it would have been an even darker night for the Wallabies.

That was no consolation to Smith, who was gutted by his team's inept display.

"That was unforgivable. Our mistakes were unforced. This has been one of my greatest losses. It's very hard to take," Smith said.

"But we're a team that are really solid and bond together and we'll definitely learn from this and bounce back."

Connolly was hoping the loss would serve as a wake-up call for the Test side, which contained only one minor surprise.

He said Shepherd gained the nod ahead of Gerrard and Scott Staniforth because his goalkicking ability would ease the pressure on first-choice kicker Matt Giteau, who will be starting at halfback in a Test for the first time.

As expected, Australia's most-capped five-eighth Stephen Larkham will start at inside centre for the first time in his senior rugby career.

But there was no place on the bench for Smith, selectors instead opting for the fresh legs of NSW backrower Stephen Hoiles ahead of the 69-Test veteran.

Team:

Chris Latham, Clyde Rathbone, Lote Tuqiri, Stephen Larkham, Cameron Shepherd, Mat Rogers, Matt Giteau, Wycliff Palu, Phil Waugh (capt), Rocky Elsom, Dan Vickerman, Nathan Sharpe, Rodney Blake, Tai McIsaac, Al Baxter. Reserves: Brendan Cannon, Benn Robinson, Mark Chisholm, Stephen Hoiles, Josh Valentine, Mark Gerrard, Adam Ashley-Cooper.

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