Beale missed the defeat against Scotland and the opening two victories in the three-Test series against the Grand Slam champions while he was recovering from a shoulder injury.
But he will return at full-back at the Allianz Stadium on Saturday with a licence to thrill from head coach Robbie Deans and Howley knows that could spell danger for Wales as they try to grab that elusive first win over the Wallabies in Australia in 43 years.
Without Beale, as well as the Wallabies' other two young backline stars, James O'Connor and Quade Cooper, Deans' team claimed a 27-19 victory in Brisbane and a last-gasp 25-23 win in Melbourne.
"It is red alert for us with Kurtley Beale back in the side - he gives us another problem to worry about," Howley said.
"He is a world-class player who has huge ability to beat a man. We were very happy with our defence and line speed in Melbourne, but the addition of Sitileki Timani in the second row means they are looking for some more go-forward.
"Our possession statistics need to improve and we need to find greater accuracy and composure in our game at vital moments."
Despite losing their two games to date against the number-two ranked side in the world, the narrow defeats in Brisbane and Melbourne have allowed Wales to rise to fourth place in the rankings.
A win in Sydney would consolidate that position in a year when the top four places are vital for Rugby World Cup seedings.
Howley has given a vote of confidence to his starting line-up for the third Test, making only one change among the replacements by dropping Richard Hibbard and replacing him with Scarlets hooker Ken Owens.
But, even after two days off, some of the players are still trying to come to terms with the manner of defeat in Melbourne, where Wales led for 71 of the 80 minutes and lost to a penalty with the last kick of the game.
"It was tough seeing the clock with 30 seconds left. We thought we were going to be OK, but those penalties at the end killed us," said Ospreys centre Ashley Beck, who made his first start for Wales at the Etihad Stadium.
"Everyone has now got off their chest what was needed to be said and we are learning from everything that is happening to us on this tour. It is all about expressing ourselves at the weekend and getting something that we feel we deserve.
"Taking your chances and being clinical - that is what international rugby is all about. In the first game we had six line breaks and scored one try.
"In the second Test we took our tries, but weren't clinical enough in defence and gave away those vital penalties. You have to be clinical in both attack and defence.
"The Wallabies are very good in offence and are difficult to defend against. And now they have brought in Kurtley Beale, who has brilliant feet and is a very good attacking player."
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