Australia paid the price for a horror opening 15 minutes as Ecuador took a 2-0 lead thanks to a pair of cruel defelctions that left Joeys shot stopper Adam Pavlesic stranded.
A second half revival gave the Joeys hope of a shock comeback but they left their run too late with Noah Botic scoring Australia's only goal in the dying minutes.
It was a sobering start to Australia's World Cup campaign and means they'll need a win in their next game against Hungary to keep their hopes of progressing past the group stage alive.
It was a nervy start for the Joeys and it didn't take long for their South American rivals to capitalise.
Ecuadorian Midfielder Erick Plaus pounced on a poor clearance only four minutes in with an audacious shot from outside the box which careened off defender Izaack Powell and into the back of the net to make it 1-0.
Moments later Ecuador doubled their lead with a cross from Pedro Vite deflecting off the outstretched foot of Joeys defender Anton Milnaric and past the outstretched arms of Pavlesic.
Australia began to find their rhythm as the half progressed but were unable to break down their opponents well drilled midfield.
Going into the break down 2-0, Australia needed something special in the second stanza if they were going to take anything away from their opening Under-17 World Cup fixture.
Possession was well and truly in the Joeys' favour after the interval and they were unlucky not to have cut into the deficit mid way through the second-half when a Botic goal was denied for offside.
The Aussies had momentum on their side in the dying minutes and finally found a breakthrough in the 90th minute courtesy of that man Botic.
The Hoffenheim striker clinically fired into the back of the net after a cut-back from the wing.
Desperation football from Australia nearly helped them claim an unlikely draw when a Joeys header sailed inches wide of the post with one of the last kicks of the game.
It wasn't to be for Australia who now take on Hungary on Wednesday morning.