Four-time champion Roger Federer has suffered his earliest Australian Open exit in 12 years, losing a four-set third-round shocker against world No.46 Andreas Seppi.

Federer’s hopes of grabbing an 18th grand slam title next week in Melbourne were thwarted by the Italian veteran who has never progressed beyond the fourth round of a major.

The result was as surprising as the fashion in which it was achieved, with Seppi triumphing 6-4 7-6 (7-5) 4-6 7-6 (7-5) in a match that lasted almost three hours.

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Federer’s ninth double-fault came in a dramatic final tiebreak, the second seed giving up an early lead – as he did in the second-set breaker.

The boilover raises the stakes for Australian young gun Nick Kyrgios, who will face Seppi in the fourth round if he trumps Tunisia’s Malek Jaziri on Friday night.

Kyrgios defeated Seppi in the second round of last year’s US Open.

Friday’s match was littered with moments when the Swiss icon looked like steadying, even after Seppi grabbed the opening two sets at Rod Laver Arena.

Federer found his feet in the third set, dropping only four points on serve.

But Seppi kept his cool and completed the upset in the fourth set – leaving the crowd stunned.

“I just tried to enjoy playing on the centre court. It’s not often I get the chance,” Seppi said.

“It’s never comfortable playing against Roger … I was focused on my service games because I didn’t have many chances on his serve.

“It was one of the best matches (of my career) for sure – I won against Roger.”

The opening week is always expected to be a walk in Melbourne Park for Federer – a reputation well earned given he has reached at least the semi-finals for 11 straight years.

There were no such problems for Andy Murray, who banked another straight-sets win.

He powered into the fourth round at the expense of Portugal’s Joao Sousa.

Murray downed Sousa 6-1 6-1 7-5 at Hisense Arena in two hours and six minutes.

Sousa, who needed medical treatment in the second set, was simply outclassed.

The sixth seed is yet to be seriously tested at Melbourne Park this week, with a first-match tiebreak being the closest he has come to dropping a set.

Murray next meets Bulgarian 10th seed Grigor Dimitrov.

And Rafael Nadal is also into the last 16, thanks to a straight sets win over Dudi Sela.

The Spaniard, who struggled to overcome Tim Smyczek defeated the Israeli 6-1 6-0 7-5.

– AAP