England were out-smarted and out-played by the Wallabies, who had too many ideas in attack and too much nous in defence for Lancaster's greenhorn side as the visitors claimed a 20-14 victory at Twickenham.
Michael Hooper, Australia's second-choice openside flanker, was man of the match as the Wallabies controlled the breakdown and stifled England.
Lancaster is attempting to rebuild the national team and that means overlooking veterans like Nick Easter and France-based players like Steffon Armitage, no matter how they are playing.
Sir Clive Woodward argued that Lancaster must focus on selecting the best team to beat South Africa next weekend and not place too much focus on a tournament three years hence.
But Lancaster will not change his policy on the back of one defeat which, however frustrating, he believes can play a key role in the development of the team.
"We are developing a squad. We have come very close to winning and we should be confident in the decisions we are making," Lancaster said.
"Bringing on Mako Vunipola and Joe Launchbury, two 21-year-olds, in the pack shows where we are and where we want to get to.
"The players in France are not available to play against New Zealand (on December 1 because the match falls outside the international release window).
"We could maybe pick someone but the reality is we couldn't play them against New Zealand so what do we do then?"
Vunipola, Launchbury and Tom Wood were integral to England's improved performance in the final quarter at Twickenham, injecting athleticism to a previously stodgy performance.
As the England squad reconvened in camp last night there was a clamour for Lancaster to make changes, with Woodward arguing he had to be a "tougher" side.
In addition to those who made an impact off the bench, prop Alex Corbisiero, centre Jonathan Joseph and number eight Ben Morgan are all pushing for starts against South Africa.
England lost two twice to the Springboks on the summer tour and then drew the third Test in Port Elizabeth, when Danny Care delivered a man of the match performance.
They were given some slack on that tour, an acceptance that the Test series would form part of a steep learning curve for the young England team.
But Lancaster himself had described this autumn as "production time". The slack was pulled taught by the squad themselves.
But Care accepts that means they must claim a southern hemisphere scalp to prove the team is heading in the direction Lancaster claims.
"We know what is coming. We should have got a win in the last Test in the summer and that gives us the confidence we know how to go out there and beat them," Care said.
"We can't keep losing at home against these big teams. It is the worst feeling."
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