Wallabies coach Michael Cheika has admitted bungling the team's mental preparation after his side suffered their worst defeat to New Zealand on home soil in more than a century.

The 42-8 loss to the All Blacks puts them 1-0 down in the three-Test Bledisloe Cup series and with a return match in Wellington next Saturday, Cheika has a mountain to climb this week.

"I don't think it's about changing everything, it's about getting the focus clearly on what's important," Cheika said.

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"I take responsibility for that, the mental preparation, that's my domain and I've got to make sure the players are switched on to what is in focus.

"And that's why you would see me being very down, because I feel like I've let them down because I haven't put them into a space where they're going to do whatever it takes, especially around defence.

"It's all connected, so I will have a good look at how I've prepared that over the last few weeks and try to add or refine and put some focus on what I need to make sure that the point is very clear for next weekend."

Video slideshow: Selection of images by Herald photographer Brett Phibbs

A selection of images by Herald photographer Brett Phibbs of the All Blacks' win over Australia in Sydney

Cheika was most disappointed with his side's poor defence, which missed 31 tackles - a reflection of the lack of mental toughness in the team last night.

"You'll have a chance to build on that in seven days, that's what they'll have a chance to do, there'll be no bigger Test for mental fortitude than that," Cheika said.