Despite leading at half time, England went down 28-27 in Dunedin after being on the receiving end of a second half blitz from the clinical New Zealand backs on Saturday.
A 10-6 lead at half time for the tourists shook the World Champions into life with three second half tries to give them an unassailable two nil lead in the Test Series.
Second half scores from Ben Smith, Julian Savea and Ma'a Nonu showed the true power in the All Blacks' line up and at times the English struggled to hold possession and territory against the relentless tide of the hosts' attacks.
But England saved plenty of pride following a brave late comeback and tries from Mike Brown and Chris Ashton adding to an early Marland Yarde try with 12 points from the boot of Owen Farrell.
England started brightly at the Forsyth Barr Stadium, and as an early chance looked to be going begging, Marland Yarde picked a neat line off Danny Care to power past Richie McCaw and stretch over, adding to an early Farrell penalty.
New Zealand gained a foothold and Aaron Cruden added a pair of penalties himself but England will clearly rue the inability to finish off a score at the end of the first period as Manu Tuilagi, playing on the wing, was superbly snagged by Ben Smith when a score looked certain.
The All Blacks then made the tourists pay for that mistake by running in a trio of scores in a breathtaking half hour.
First, with Tom Wood picking a neat inside line, Billy Twelvetrees' break and offload found the floor, and from the turnover, the All Blacks spread the ball wide, and as Cruden dummied his way through the line, Savea found his full back Smith who cantered home under the posts.
Then it was Savea himself who got on the scoresheet as the All Blacks moved the ball wide and neatly converted an overlap to slide over in the corner.
Ma'a Nonu then dived over with the English defence getting increasingly stretched to put the hosts 18 points ahead, a far cry from England's early 10 point lead.
As England's much lauded cavalry arrived, the game was stretched and Twelvetrees fed Mike Brown who powered his way over to score despite the attentions of Corey Jane.
The final shout went to the English who in added time, worked a neat overlap to give replacement Chris Ashton the score under the posts, but the comeback probably came five minutes late.
With a midweek clash with Canterbury to look forward to this week, England will be looking for their first win on tour with Gloucester's Henry Trinder, Matt Kvesic and today's unused replacement Freddie Burns hoping to be involved.
Dan Murphy was part of a Gloucester pack which took a grip as the Sale game progressed and, ultimately, were rewarded with a late penalty try. The loose head prop says the team's improved scrummaging is down to a lot of hard work over the summer.
Gloucester clinched their first Aviva Premiership win of the season on Saturday, 34-27 over Sale Sharks, and scrum half Greig Laidlaw felt that the Kingsholm crowd played a massive part as they spurred the team on.
David Humphreys spoke to Gloucester Rugby TV after the 34-27 win over Sale Sharks at Kingsholm. The Director of Rugby praised the Kingsholm crowd for spurring the team on to a super second half comeback.
Speaking to Gloucester Rugby TV this week, Sione Kalamafoni is expecting a tough, physical battle against Sale Sharks as the Cherry and Whites return to Kingsholm for Round Two of the Aviva Premiership
Previewing this weekend's Aviva Premiership fixture at home to Sale Sharks with the local media, Director of Media David Humphreys admitted he's looking forward to the team's first competitive outing in front of their own supporters.
Harlequins' intriguing trip to Kingsholm kicks off another bumper set of live Aviva Premiership Rugby matches on BT Sport. The 2012 Aviva Premiership Rugby Champions will now travel to face David Humphreys' Gloucester Rugby side on Friday 14 November for a 7.45pm kick-off.
Gloucester United got off to a flying start with an early try in this evening's Aviva Premiership A League fixture at Worcester Cavaliers, but it was downhill from there as the home side dominated in a 34-17 win.
Triumphant in their challenge, the Gloucester Rugby Former players have successfully completed the 969 mile journey from Land's End to John O'Groats despite the aches and pains they endured on the way.