The Kiwis, 1-0 down in the series, were cruising at 179 for two at Eden Park only for Hamish Marshall to be trapped leg before wicket by Shane Warne for 76 before captain Stephen Fleming (65) played a ball from Michael Kasprowicz on to his stumps.
Jason Gillespie then collected his second wicket when Lou Vincent (two) shouldered arms to a delivery that clipped his off stump.
Marshall, who recorded his maiden Test hundred in the series opener in Christchurch, continued his excellent form while Fleming rediscovered his touch after making 36 runs in his previous four innings.
"It was a bit of a battle and it wasn't pretty at times," Marshall said.
"It was one of those pitches where you never really felt in.
"There wasn't a lot of pace in it and they were bowling good areas as they always do, and putting us under pressure."
TEST DEBUT
Fleming dropped himself down from opener to number four to allow Marshall's identical twin brother James to go in first on his Test debut, marking the first time identical twins had played a Test together.
James Marshall made a promising start to his international career with a stylish 29 that featured three boundaries.
He lost fellow opener Craig Cumming when he was trapped lbw by Gillespie for five after failing to offer a shot to a ball that darted back sharply from outside off stump.
The twins steadied the innings with a 38-run stand before James edged Glenn McGrath to Matthew Hayden in the gully, handing the Australian his 493rd Test wicket.
Fleming and Hamish Marshall added 126 for the third wicket, batting through the entire middle session.
Hamish batted nearly four and a half hours before falling with the total on 179. Fleming followed four runs later and Vincent was dismissed with the score on 194.
Although McGrath claimed only one wicket on Saturday, the lanky paceman returned extraordinary figures of one for 20 off 24 overs, including 17 maidens.
"It was an incredible spell from Glenn, no question," Australian coach John Buchanan said.
"I think we've certainly got our noses in front. New Zealand had laid a platform and there was an opportunity for them to really get on with the game."
New Zealand first innings
C.Cumming lbw b Gillespie 5
J.Marshall c Hayden b McGrath 29
H.Marshall lbw b Warne 76
S.Fleming b Kasprowicz 65
N.Astle not out 7
L.Vincent b Gillespie 2
B.McCullum not out 1
Extras (b-4 lb-8 nb-2) 14
Total (for five wickets, 90 overs) 199
Fall of wickets: 1-15 2-53 3-179 4-183 5-194
To bat: D.Vettori, J.Franklin, P.Wiseman, C.Martin.
Bowling: McGrath 24-17-20-1, Gillespie 20-7-50-2, Kasprowicz 23-6-57-1 (nb-1), Warne 19-4-50-1 (nb-1), Ponting 4-1-10-0
