Jenson Button won his first race as world champion in Australia capitalising on another reliability problem while leading for Sebastian Vettel.
The German, who started the race on pole, had a suspected brake failure midway through the race, and ended up beached in a gravel trap.
Button said this win in his second race for McLaren was 'very special', and it was his decision to change to dry tyres early in the race which meant he could take full advantage of Vettel's problem.
Robert Kubica finished an excellent second place for Renault after starting ninth, and Felipe Massa got the better of his teammate to take the final step on the podium.
Fernando Alonso took fourth place while Rosberg took advantage of a late incident between Lewis Hamilton and Mark Webber to finish fifth.
Hamilton, who at one stage looked set for a strong a podium finish, could only finish sixth. Liuzzi picked up more points for Force India in seventh, with Rubens Barrichello, Mark Webber and Michael Schumacher rounding off the points place.
Heikki Kovalainen finished another race for Lotus, and Karun Chandhok also managed a first race finish for Hispania. Virgin Racing were again blighted by reliability issues and failed to get either car to the end of the race.
After the drab desert race of Bahrain, Australia promised, and crucially delivered, a very entertaining race. Before today there had been 10 safety cars in the last three grand prix, and at least one in eight of the last 11 races. To add to the excitement, rain starting falling just 15 minutes before the start, and before the mechanics had left the grid the track was wet enough to make intermediate tyres a necessity.
Even before the lights had gone out there was one retirement: Jarno Trulli had hydraulic problems driving to the grid and had to return to the garage. The two Virgin cars had to start from the pit lane as they required changes under parc ferme conditions.
Felipe Massa made the best start in the tricky conditions, getting up to second place behind Sebastian Vettel from fifth on the grid. Jenson Button tagged Fernando Alonso and the Ferrari spun. The spinning Spaniard broke Michael Schumacher's front wing, as the German tried to sneak around the outside of the first corner. Hamilton made a charge from eleventh on the grid up to eighth.
Later in the opening lap, Kamui Kobayashi had what looked like another front wing failure, just like in Friday practice. He collected Sebastien Buemi and Nico Hulkenberg, and all three drivers found their races ending in gravel traps. This brought out the much anticipated safety car.
Karun Chandhok was running in fourteenth behind the safety car, which came in at the end of lap 4. The order at the restart was Vettel, Massa, Webber, Kubica, Rosberg, Button, Hamilton and Sutil.
Hamilton got past his teammate to grab sixth place on Lap 6 from Button and Webber got past Massa shortly afterwards. Button surprised everybody by pitting at the end of that lap – the first to take on slick tyres. Button had an excursion onto the gravel in Turn 3 after exiting the pits, suggesting he had taken the gamble a bit early. However, he was then the fastest person in the second and third sectors of his out lap.
This inspired flurry of cars to come in at the end of Lap 8 but the two Red Bull drivers stayed out for another lap. Vettel made his stop at the end of Lap 9 and retained the lead but Webber stayed out as Button was setting much faster laps that the rest of the field. When Webber finally pitted at the end of Lap 10 is was too late for the Aussie, the world champion ended up just behind race leader Vettel.
Mark Webber, who has never finished higher than fifth in his home grand prix, found himself sixth after the first round of pits stops, with Lewis Hamilton crawling all over the back of him.
An incident involving Webber, Hamilton and Massa on Lap 16 saw Webber overtake Massa, and Hamilton followed him through. Hamilton also had a run at Webber, got past him momentarily, before Webber tried to get back ahead. It was at this moment the two touched, and Webber came of worst, and had to take a trip across a gravel trap. Massa got back past the both of them to retain the fifth place that was originally his.
At the end of Lap 21 Hamilton got past Massa to take fifth when the Brazilian got a little out of shape going into the final corner. Alonso threatened his teammate as well, but as the Spaniard was paying attention to what was happening ahead of him, Webber snuck past.
Leader Sebastian Vettel had a brake problem ended up beached in a gravel trap and out of the race on Lap 26. Button took the lead of the race, but it was teammate Hamilton who was really impressing – he'd just overtaken Nico Rosberg.
At half distance the order was Button, Kubica, Hamilton, Rosberg, Webber, Massa, Alonso, Barrichello. Michael Schumacher was in eleventh place after his disastrous start. Kubica's second position was looking precarious though, Hamilton was all over the back of him.
Schumacher made a second stop for dry tyres on Lap 30, and on his new soft tyres he set the fastest of the race. Webber, who had been languishing in seventh also decided to make a stop, and Rosberg followed suit on the following lap.
New leader Button then set the fastest lap just as Hamilton, who had been unable to get past Robert Kubica, made a surprise pit stop, which allowed the two Ferraris back past him. After the race Hamilton was angry with his team because he had pitted and all the other drivers in front of him hadn't. Martin Whitmarsh conceded after the race that it was probably the wrong call.
In the period after his second pit stop Hamilton was lapping nearly a second-a-lap faster than his teammate, but was down in fifth. Button was still increasing the gap to second place Robert Kubica, and had no intention of replicating his teammate's tyre change. By the end of Lap 43, Button had a 15 second lead over the Pole.
Hamilton was chasing down the two Ferraris, who looked to be struggling on soft tyres that had completed over thirty laps. At a rate of over 1.5 seconds a lap, the Brit was quickly catching fourth place man Alonso.
With eight laps to go Hamilton had driven up to the back of Alonso, and the Ferraris looked like sitting ducks, under-steering and with little traction out of the corners. However, in Alonso's dirty air, overtaking didn't look quite as straightforward for Hamilton as predicted. Webber was right behind Hamilton as well, providing an extra distraction.
Meanwhile, Button was quietly setting personal best lap times at the front, the race win seemingly in the bag.
With just three laps to go Hamilton made an attempt to pass Alonso around the outside, and Webber run into the back of the Brit, sending him into a spin in the gravel. Hamilton eventually got back on track, while Webber needed to pit for a new front wing. Hamilton just lost one place to Rosberg and finished sixth.
While chaos reigns behind him, Button calmly rounded off a serene victory, driving past the chequered flag waved by John Travolta.