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MELBOURNE – Spain's Rafael Nadal firmed as Australian Open favourite on Monday with another impeccable display as Andy Murray's Grand Slam bid folded before the quarter-finals.

As Nadal whipped Fernando Gonzalez to reach the last eight, 2008 finalist Jo Wilfried Tsonga was also in fine touch as he dismissed US star James Blake in straight sets.

Nadal, who is yet to drop a set, said he was playing the best Australian Open of his life.

"Probably I am playing a little bit better than last year," he said.

"I'm not saying I'm going to be in the final or semi-finals. I think the feeling is a little bit better. But in the end the important thing is the result."

Nadal's best performance here was 2008, when he reached the semi-finals before being beaten by Tsonga, but his claims on a first hard-court Grand Slam are growing.

He has been the form player of the top seeds with triple champion Roger Federer taken to five sets on Sunday and Novak Djokovic twice pushed by Amer Delic and Marcos Baghdatis.

"I am playing well, but you never know if it's going to be enough. So I hope to continue to play like this, and later we will see, because all the matches are very, very difficult," Nadal said.

Meanwhile, Murray's campaign ended in tears as he was bullied off court 2-6, 6-1, 1-6, 6-3, 6-4 by Fernando Verdasco, the stocky Spaniard with the laser serve.

Murray, who clashed with Federer and Djokovic over his status as pre-tournament favourite, refused to make excuses despite falling ill with a cold.

"If I say that I'm sick and it affected me, I know it's going to be like, 'Well, he's making excuses for losing,'" he said.

"I don't feel that was the reason why I lost. I definitely did have my chances, and he played too well."

The defeat puts on hold Murray's attempt to win Britain's first Grand Slam since 1936, and also ruins his chances of becoming world number one in the next six months.

Verdasco, who compiled the best record of any player of the early rounds, nailed 74 percent of first serves to reach his first Grand Slam quarter-final in 23 attempts.

"It was one of my biggest goals to be in a Grand Slam quarter-finals for the first time. Right now I'm so happy to make this goal possible," said the Spaniard.

In the late match, Blake didn't get a look at Tsonga's serve in the first two sets and was furious after being broken back when serving for the third.

Tsonga then dominated the tie-break, pummelling some big forehands before sealing it with an ace 6-4, 6-4, 7-6 (7/3).

"I think I'm playing better than last year," he said. "I'm stronger maybe in my head, and it helps a lot."

Earlier Nadal, capitalising on Gonzalez's four-hour marathon with Richard Gasquet on Saturday, raced through the first two sets in less than 40 minutes each.

The Chilean 13th seed mounted a brief revival in the third but Nadal hit back from 3-0 down and got the decisive break 4-3 to end it 6-3, 6-2, 6-4.

Gonzalez ousted Australia's Lleyton Hewitt in a five-set first-round match before Saturday's thrilling duel with Gasquet, when he took the 88-minute fifth set 12-10.

"Of course, I was tired. But I don't think it's the reason. I was able to run. I was able to compete today. Maybe I didn't play my best tennis, but I can run," Gonzalez said.

MELBOURNE – Seven-time Grand Slam champion Venus Williams was dumped from the Australian Open on Thursday but it was a different story for Rafael Nadal and Andy Murray who barged into the third round.

Venus lost the plot against Spain's unseeded Carla Suarez Navarro, crashing 2-6, 6-3, 7-5 for the upset of the tournament so far and continuing her unhappy association with the event which she has never won.

Her sister Serena lived to fight another day, but she too struggled.

The three-time champion needed to mount a second-set recovery after Gisela Dulko took a 5-2 lead. The American finally woke up to reel off five games in a row and tame the Argentinean 6-3, 7-5.

"When you go out on court you have got to expect anything," said Venus, the sixth seed.

"I'm not surprised at how well she played. I haven't quite figured out the areas of my game that went wrong, but I have to credit her."

In hot and blustery conditions, Nadal crushed Roko Karanusic of Croatia 6-2, 6-3, 6-2 to stay on track for his first hardcourt Grand Slam title.

The world number one wrapped up his one-sided match in 97 minutes to set up a clash with 79th-ranked German Tommy Haas.

"He played aggressively, it's not easy to play against someone who plays inside the court and hits big shots with the forehand," Nadal said.

"But I feel very comfortable here and I'm very happy with the victory."

Joining him in the next round was Britain's fourth seed Murray, who wasted little energy in disposing of Spain's Marcel Granollers 6-4, 6-2, 6-2.

"I've been playing really well for the last six or seven months and it's probably the best I have felt coming into a Grand Slam," said the Scot, adding that he was confident he could go "deep" into the tournament.

Serena, who next plays China's Peng Shuai, acknowledged her performance had not been good, rating it a D-minus.

"Today I was at like a D-minus at best," she said.

"But it's good that I was able to win, too, when I wasn't playing my best. I definitely will try to do better.

"She had some opportunities but I never felt like I was going to lose."

She joins top seed Jelena Jankovic, third seed Dinara Safina and fifth seed Ana Ivanovic in the third round after they all assured their berths on Wednesday.

While Serena is considered the favourite, despite her unconvincing performance, the unassuming Elena Dementieva is in a rich vein of form.

The Russian fourth seed steamrolled over the Czech Republic's Iveta Benesova 6-4, 6-1 for her 12th straight victory this year after claiming back-to-back titles in Auckland and Sydney.

The Beijing Olympic gold medalist is seen as one of the most consistent players never to have won a Grand Slam, and she senses her time is coming.

"I'm not thinking about my chances," she insisted. "I'm really enjoying the way I'm playing right now and I just want to go as far as I can, just enjoy every single match I play here."

Also safely through was eighth seed Svetlana Kuznetzova and 2006 champion Amelie Mauresmo, who survived a scare from British qualifier Elena Baltacha to win 4-6, 6-3, 6-2.

Next up for Maursemo is dark horse Victoria Azarenka, who continued her recent impressive form by breezing past the Czech Republic's Petra Kvitova 6-2, 6-1.

Among the men, fifth seed Jo-Wilfried Tsonga survived a 195-minute marathon to down Croatian Ivan Ljubicic 6-7 (4/7), 7-6 (10/8), 7-6 (8/7), 6-2.

Meanwhile, Chilean 13th seed Fernando Gonzalez sped past Argentina's Guillermo Canas 7-5, 6-3, 6-4, setting up a clash with 24th seed Frenchman Richard Gasquet.

They were joined by sixth seed Gilles Simon, fellow Frenchmen Gael Monfils, in-form Spaniard Fernando Verdasco and American James Blake.