The Finn prospered when Citroen's Sebastien Loeb retired after rolling over on stage two at Coffs Harbour on the New South Wales east coast.
Hirvonen could not believe his luck as Sebastian Ogier subsequently crashed into a tree at the treacherous Shipmans stage to join team mate Loeb on the sidelines.
"It was so unbelievably slippery and when you brake it is like ice," Hirvonen was quoted as saying by the event's official website.
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"I went off the road but it was into a field so there was nothing to hit."
The biggest threat to his lead came from team-mate and compatriot Latvala, who spun and lost 20 seconds in the morning following a steering problem but was fastest in three of the day's six gravel tests to lie second.
Petter Solberg overcame a high-speed spin and a trip into a field to lie third in his privateer Citroen, ahead of brother Henning. Several drivers either spun or went off the road.
Citroen has not confirmed if Loeb and Ogier would resume the rally.
Former Formula One champion and Ice 1 Racing driver Kimi Raikkonen skipped the event and has been excluded from the end-of-season classification of the World Rally Championship.
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