New South Wales 102 (O'Neill 4-23) & 124 for 8 (Sangha 53*, Sutherland 3-21, Murphy 2-13) need another 255 runs to beat Victoria 196 (Tremain 4-32) and 284 (Handscomb 90, O'Neill 70*, Tremain 4-50)

Peter Handscomb defied a challenging MCG surface before captain Will Sutherland produced a hostile spell of pace bowling as Victoria closed in on a big Sheffield Shield victory over New South Wales.

Victoria's formidable attack was irresistible late on day three as they tore through a struggling NSW batting order and they need just two wickets to claim their first win of the Shield season.

Chasing a daunting 379 runs in bowling-friendly conditions, NSW openers Ryan Hackney and Daniel Hughes started doggedly but faced an uphill battle against masterful new ball bowling from Scott Boland and Fergus O'Neill.

Hackney succumbed to a typically metronomical Boland after he was sharply caught by Handscomb at first slip. O'Neill then clean bowled Hughes with a superb delivery from around the wicket before a pumped-up Sutherland took over after tea.

He had skipper Moises Henriques trapped lbw before dismissing Blake MacDonald caught behind with a brute of a short delivery. Sutherland's purple patch was complete when late movement deceived Matthew Gilkes, whose off stump was rattled after shouldering arms.

Offspinner Todd Murphy, playing in his 17th first-class match, bowled for the first time in a Shield match at the MCG. Having not been needed to bowl in NSW's first innings, Murphy dismissed Ben Dwarshuis lbw in his first over and later claimed Chris Tremain with a return catch.

Play was extended by an extra half an hour, but Victoria's push to wrap up victory before the close of play was thwarted by Jason Sangha, who made a fighting half-century in a lone hand.

With sunny conditions forecast on day four, Victoria should complete a convincing victory to get their season back on track.

After falling short to Western Australia in the last two Shield finals, Victoria armed with a blend of youth and experience entered the season confident of going one step better.

But innings defeats to WA and Queensland on the road have caused concern in a sluggish start to the season. Victoria have clearly enjoyed returning home in what has been a domination of NSW, who finished with the wooden spoon last season.

Resuming on 40, having lifted Victoria from 92 for 5, Handscomb took the contest away from NSW with composed batting as he notched his first half-century of the Shield season.

Handscomb did his best to shake being pigeonholed as a subcontinent specialist as he thwarted NSW's quicks, particularly Tremain who was the Blues' most threatening bowler.

He also used his feet nicely to curb Test offspinner Nathan Lyon, who bowled accurately but without reward. Handscomb appeared set for a deserved century until falling on 90, when he was caught behind off an outside edge to Dwarshuis

Lyon had his first wicket of the match when he had understudy Murphy caught at short-leg. In his second game since returning from a calf injury that ended his Ashes tour, Lyon finished with match figures of 1-81 from 36 overs.

Victoria were left frustrated by tailenders Boland and O'Neill, who effectively threw the bat and reached his maiden first-class half-century with a boundary.

Boland contributed just one of the 58 runs in the last-wicket partnership before he was bowled by the hardworking Tremain, who finished with eight wickets for the match.

O'Neill's cavalier unbeaten 70 left NSW dejected and they never recovered.