Iraq pulled off a stunning 3-1 upset win over Australia at the Asian Cup on Friday to leave the tournament favourites in danger of an embarrassing early exit.

Nashat Akram scored from a free-kick in the first half after a terrible mistake from goalkeeper Mark Schwarzer and Hawar Mulla Mohammad and Karrar Jassim Mohammad capitalised on further defensive errors to find the net after the interval.

The Socceroos briefly drew level when captain Mark Viduka scored just after half-time, but were otherwise outplayed by a team that had to train and play qualifiers in neutral Jordan because of the war in their homeland.

"I told you all before the game [that Iraq would win] and no-one believed me," Iraq's Brazilian coach Jorvan Vieira told a news conference.

"I know my players, I know these men. I knew they could win and we proved today we can do anything."

Australia coach Graham Arnold could not disguise his fury at the performance of his team, who reached the second round of last year's World Cup.

"As far as I saw some players didn't even want to be here," Arnold said. "They can blame the heat and humidity as expected but this was about attitude."

The Australians can still reach the quarter-finals if they win their last pool match against co-hosts Thailand on Monday. 

Iraq and Thailand lead the Group A standings, while Australia and Oman each have a solitary point from the first two rounds.

SENT OFF

Australia will be without West Ham defender Lucas Neill against Thailand after he was sent off in stoppage time for a second yellow card, but Arnold said he was already planning to wield the axe on some of the team's higher-profile players.

"We'll do our best against Thailand. We have players on the bench desperate to go out and play," Arnold said.

"The players have their heads down. They're hurting badly but some players have to question if they want to be here."

The Australians had promised to atone for their lacklustre display in Sunday's 1-1 draw with Oman but could not have made a worse start, gifting Iraq the lead in the 21st minute.

Akram delivered a seemingly innocuous free kick straight at Schwarzer but instead of catching the ball, the Middlesbrough watched in horror as the ball floated past him into the net.

The Socceroos equalised within two minutes of the re-start when Brett Emerton curled the ball into the box for his skipper, but their eagerness to attack was undone by sloppy defending.

Hawar Mulla Mohammad put Iraq back in front after 58 minutes and substitute Karrar Jassim Mohammed sealed victory with a tap-in goal five minutes from time. 

"A lot of people in Iraq will be happy. For 90 minutes, maybe there will be peace," Vieira said.

"Now there will be a celebration. There will be many (gun) shots in the air."

• Complete football coverage