Skipper Steven Smith blamed Australia's "lack of discipline" on the batting front for the number one Test team's shock loss to Sri Lanka in the first match in Pallekele on Saturday.

Australia were bundled out for 161 in pursuit of a challenging 268-run target.

"We did quite well to bowl them out for 117, but we lacked a bit of discipline in our batting," Smith, who had to swallow a bitter first defeat as Test captain in his 12th match, told reporters.

"We were in a good position to get a bigger lead than 86, but didn't get that," said a disappointed Smith.

Mendis registered his maiden Test ton to help Sri Lanka notch 353 in their second outing and the home spinners led by Rangana Herath soon took charge.

"Kusal Mendis played an outstanding innings and took the game away from us. 267 against quality spinners was going to be tough task and we weren't up to that," said Smith.