Citroen's Dani Sordo has ended the second day of the Repco Rally Australia at the head of the pack, fractionally in front of Sebastien Loeb and Mikko Hirvonen after tactics came into play late on.

Jari-Matti Latvala had led following the first leg on Friday, however he struggled running first on the road and slipped back this afternoon, when he was overhauled by Loeb in SS21, the 8.59 kilometre CTEK West test.

Loeb then increased his lead to 11.1 seconds in SS22, before deliberately slowing in the last 'proper' test, which locked in the starting order for the final leg. Sordo also opted to ease off in SS23, something that initially handed Hirvonen the lead. Mikko will now have to play the 'road sweeper' on Sunday and clear the loose gravel for those behind, potentially leaving a cleaner and quicker line.

However, Hirvonen lost P1 right at the end of the leg, when he was 'passed' by Sordo following the two Tweed super specials. He now trails the Spaniard by just 0.1 seconds, and remarkably, so too does Loeb.

"It's so close, it is incredible," said Hirvonen. "The final leg is the longest of the rally, which is good because it means there are a lot of kilometres in which to fight for the win. I tried to push as hard as possible this afternoon, but I tried too hard because I made some small mistakes.

"I didn't want to be first on the road tomorrow but there was nothing I could do about it and it will be tough trying to win from that position if conditions are dry. However, if it is wet, it could be perfect."

Loeb meanwhile said he had no alternative but to ease off in SS23, given how much time he would have potentially lost running first in the order.

"We had to do it," confirmed the Frenchman. "I would have had no chance [to win] clearing the road. It's not something I like, but the regulations force us to use this sort of strategy.

"It's frustrating to spend all day driving flat out only to end up dropping time purposely. At the end of the day, though, I think I'm in a good position now going into the longest leg of the rally."

Further down the order, Latvala is fourth, over 40 seconds off the battle for the victory and only 1.8 seconds up on Sebastien Ogier in fifth. Latvala managed to hang onto his lead on the first loop, after torrential early morning rain soaked the roads and helped him to find better grip.

But, as the clouds cleared and the sun came out in the afternoon, the roads quickly dried and he slipped back. He also hit a bank in SS23 and picked up a slow puncture that cost him even more time.

"About 3km after the start I approached a long, fast left bend with a bump on the exit. I hit the bump and the car jumped sideways into the ditch," Latvala recalled. "The rear wheel hit a bank and the impact pushed the tyre off the rim. I continued but about 5km from the end the tyre exploded, damaging the side of the car.

"I had enjoyed the day but it was a disappointing end. I suffered from sweeping the tracks this morning and it was harder being first on the road than I thought. The first stage was wet but the others were mostly dry and I couldn't find a rhythm. I lost time in slow bends because I slid wide too often."

Of the rest, Henning Solberg is sixth, but he had a torrid day and was lucky to be able to continue after going into a ditch in SS17. His windscreen was smashed in the incident and in addition to his car suffering bodywork damage, he also injured his thumb.

Henning lies over 2.5 minutes off the front runners and almost 2 minutes off the battle for fourth. His woes have also allowed Matthew Wilson to close right up in the sister Stobart Ford car and post-SS25 just 0.8 seconds splits them.

"It's been a difficult day for us," Henning reflected. "Obviously we had our problems this morning when we slid off at high speed which was a big surprise to me. We just hit the mud and away it went. When we were sliding off I caught my thumb in the steering wheel and the swelling has been getting worse since then; the pain on the last few stages today was really bad.

"I'm trying to get a good setting on the car and tomorrow we will try with a set-up that we used at Rally Finland. I'm still in sixth place and if any of the guys in front of me make a mistake then I could get up into the top five which would be a good result."

Federico Villagra completes the points' scorers in a lonely eighth, a minute further back and over 5 minutes up on Hayden Paddon's Mitsubishi. Martin Prokop rounds out the top ten and he also holds the lead in the Production Car World Rally Championship category.

Prokop had been behind Richard Mason, but he moved back in front in SS17 and ended the day 18.3 seconds ahead. Cody Crocker completes the P-WRC top-three, followed by Toshi Arai and Armindo Araujo.

In terms of retirements the only major casualties were Conrad Rautenbach and Bernardo Sousa. Rautenbach crashed out in his Citroen Junior Team-run C4 WRC in SS19, while PWRC runner, Sousa also went off, but one test later.

The action now concludes on Sunday and the final leg is the toughest and longest of the event at 125 competitive kilometres. It includes two loops of five stages, split by just a brief 15-minute service in Kyogle. The first test, SS26 - Monroe 1 - begins at 07.28 hours local time.