And while much of the media had written off the Wallabies in the lead up to the second week of autumn internationals, Lancaster admitted the Aussies provided a far tougher test than their defeat in Paris had promised.
"Australia played a smart game and, as we expected, bounced back from heir defeat against France. They were very competitive in all areas," said Lancaster.
"Australia brought a lot more energy to their performance than we saw against France. Against France we saw a couple of times when their forwards were walking around but we didn't see any of that here. I didn't see any of their forwards drop off in the first half, which is what they did last weekend.
"We knew the game was going to take until the 60th, 70th, 80th minute to come our way. I said to the players at half time, 'You've got to keep working and working and eventually you'll get there'. Ultimately when we did get that momentum in the last 20 minutes, one or two bits of execution, a knock on or a penalty, meant we didn't quite get across the line.
"The margins at this level are quite small in lots of ways. There are lots of positives we can take from our own performance but the reality is that we needed to have taken some of the opportunities we created, particularly in the last 20 minutes of the game when we felt that our tempo would pay.
"We're devastated to have lost the game. A little knock on here, a little knock on there, makes a difference. We've got to be better than that."
The battle of the breakdown was arguably the deciding factor in the English capital as Wallaby openside Michael Hooper produced a sublime display that made a mockery of the potential importance of David Pocock's continued absence.
Hooper was so often first to the ball whether in attack or defence, giving the Wallabies a decent platform to play off while continually disrupting the flow of England's own forays.
And Hooper wasn't alone at Twickenham, either. The Wallabies committed greater numbers to ruck time, risking being exposed out wide but regularly stopping Danny Care and co from picking up the kind of clean ball to penetrate beyond the first phase.
"We've got to manage the breakdown better," added Lancaster.
"They went hard at the breakdown and put a lot of players in to try and stop our quick ball. We talked at half time about getting more men around the breakdown to make sure we generated quick ball…but that ultimately was the difference."