LANCASHIRE'S Andrew Flintoff insisted England remain hopeful of mounting a recovery in the opening Ashes Test after Australia established a dominant position at the Gabba.

Having resumed on 346 for three, the home side progressed to 602 for nine before declaring with captain Ricky Ponting hitting a superb 196 and then reduced the tourists to a perilous 53 for three by the close of the second day.

It leaves England trailing by 549 runs and needing a further 350 just to avoid the follow on, but captain Flintoff remained upbeat despite the perilous position.

"It's been two hard days and Australia have played well, but I thought we stuck at it and in patches we did all right," said Flintoff.

"There are encouraging signs and it's fair to say we've got to bat well tomorrow, but we know what we've got to do.

"Ian Bell and Kevin Pietersen looked quite comfortable at the crease this evening and we're hopeful they can put on a big partnership - we need a couple of big partnerships and some smaller ones to get us up to a good score."

Flintoff insisted spirits were still high in the England dressing room despite the loss of Andrew Strauss and Alastair Cook to successive balls from Glenn McGrath before Paul Collingwood fell to Stuart Clark.

"The lads aren't deflated," the captain claimed. "It's the first two days of the Ashes series and we're going to have to come out tomorrow and bat well.

"We need to put some runs on the board and there's a lot of character in the side and this side are up for the challenge of the series. After two days, we're not going to be deflated - we just have to get better."