Australia's humiliation was complete when Ben Hilfenhaus was the last man out before lunch on the fourth morning, caught behind off Tim Bresnan for a duck after Ryan Harris was unable to bat because of an ankle injury.
There was only going to be one outcome after Australia were routed for a ground record low of 98 on Sunday's opening day after Andrew Strauss won the toss and put the Australians into bat on a greenish wicket.
The English responded with a towering 513 to hold an impregnable 415-run innings lead which Australia found totally beyond them.
Wicketkeeper Brad Haddin was left unbeaten with a defiant 55 including four fours and a six in Australia's second innings of 258 for nine.
Tim Bresnan finished as England's best bowler with 4-50 off 21.4 overs, while England number three Jonathan Trott was named man-of-the-match for his unbeaten 168.
It was the first time England had won the Ashes Down Under since Mike Gatting's team claimed the series 2-1 in 1986-1987.
Back then England won the series and the Ashes after their innings and 14-run victory at the MCG.
Australia can still level the series if they can fight back and win next week's fifth Sydney Test, but the Ashes are gone.
England last won at the MCG in 1998 with Dean Headley taking 6-60 in the second innings as the tourists won by just 12 nail-biting runs.
The heavy defeat was only Australia's second in their last 12 MCG Tests, the previous coming two years ago against South Africa by nine wickets.
It was England's 20th win in 54 Ashes Tests at the MCG.
A small crowd, dominated by the celebrating Barmy Army and other English supporters, witnessed the final rites with the Australian fans giving up on a lost cause.
Australia lost Mitchell Johnson in the second over of the final day, bowled by Chris Tremlett for six.
Haddin and Peter Siddle stalled England's victory push with some lusty hitting in a 86-run partnership with both clubbing sixes off spinner Graeme Swann.
Siddle finally fell for his Test best 40 when he hoisted Swann to Kevin Pietersen on the long on boundary.
Hilfenhaus only lasted four balls before the axe finally fell on Australia.
The crushing loss, the sixth biggest behind England's innings and 579 run win at The Oval in 1938, will heap further pressure on embattled Australian captain Ricky Ponting.
It was Ponting's third loss of an Ashes series following his earlier defeats in England in 2005 and last year.
Given the lack of experience in the scarred Australian team Ponting is expected to hold on to the captaincy for next week's Sydney Test, fitness permitting with his fractured little finger.
Australia's next Test after Sydney is not due until August against Sri Lanka.
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