* Lorenzo wins incident-packed race
* Marquez disqualified for failing to pit in time (Adds Marquez quotes, details)
By Ian Ransom
PHILLIP ISLAND, Australia, Oct 20 (Reuters) - Jorge Lorenzo's MotoGP title defence remains alive after the Spaniard won an incident-packed Australian Grand Prix on Sunday, as championship leader Marc Marquez suffered a disastrous disqualification due to a howling team error.
With tyre problems forcing riders to change bikes mid-race in a MotoGP first, the battle between the two-time world champion Lorenzo and Honda's 20-year-old wunderkind fizzled out in the 14th lap when Marquez was shown the dreaded black flag for failing to pit during the mandated window.
Riders were ordered to pit by the end of the 10th lap at the latest out of safety fears, but Marquez sped past the Honda garage as his team believed completing lap 11 was allowed.
"The plan we had was not correct, we thought that we could do that lap. We thought we could go into the pit at the end of lap 11," Marquez told reporters at the Phillip Island circuit.
"The problem was not with the pit board, that was fine, when I saw 'Box' I came in. Now we need to forget about it and just concentrate in Motegi."
Having had the chance to wrap up the title in his debut season on Sunday and become motorcycling's youngest premier class champion, a crushed Marquez slumped in a chair in his team's garage with his head in his hands as Lorenzo toasted victory ahead of Honda's Dani Pedrosa and third-placed team mate Valentino Rossi.
"I said on Thursday that the championship is very long. Today this happened and maybe in Motegi it's something else," Marquez added.
"I know we're going in the right way, I feel so good on the bike. I could have fought for the podium or the victory today."
Team principal Livio Suppo apologised to his rider.
"Everybody understood correctly instead of us," an embarrassed Suppo said. "Of course we are sorry (to Marc). It's the first time I've seen him in a very disappointed situation and he reacted as expected."
Pole-sitter Lorenzo was a deserving winner, however, having endured enormous pressure from the two Honda riders amid chaotic race conditions at the bucolic seaside track.
The win breathed new life into his title defence, trimming fellow Spaniard Marquez's lead to a more precarious 18 points with two races left in Japan's Motegi and Valencia.
"Today has been a crazy race," the affable 26-year-old said after celebrating his first win Down Under.
"With this changeover of bikes in the middle, we practised a lot before the race. So that was one of the keys.
"Now, (the title defence) is still very, very tough ... Let's see what happens in Motegi."
Lorenzo enjoyed an excellent start off the grid but was under heat within seconds, losing the lead briefly to Marquez in the first lap before snatching it back.
While placing riders and their teams under additional strain, the overhauled race added an intriguing tactical element as Pedrosa changed his bike first followed by Lorenzo a lap later.
Marquez wobbled dangerously as he wore his tyres to breaking point before the changeover and narrowly averted catastrophe as he emerged from pit-lane to brush Lorenzo, charging up the inside on his Yamaha and desperate to snatch back the lead.
Lorenzo snuck past, leaving a wobbling Marquez in his wake, and powered away to win by nearly seven seconds after twice being denied at Phillip Island by Australian Casey Stoner.
Still enjoying a strong lead, the championship may be Marquez's to lose but the rookie is likely to come under fierce scrutiny from the resurgent Lorenzo and Pedrosa, who lies third in the championship and retains a mathematical chance of winning the title.
Winner at Sepang last week, Pedrosa has been irked by his team mate's aggressive riding and there appeared little friendly about their rivalry during a fierce skirmish on the opening lap.
With the race reduced by a lap to 26 on Saturday and riders ordered to change bikes, officials announced only hours before that it had been cut again to 19 due to safety fears over the tyres' degradation on the circuit's newly-laid asphalt.
Lorenzo had earlier complained the overhaul was in itself a safety risk and appeared to be right as riders nearly came to grief when re-joining the fray from pit-lane.
The Moto2 category, won by Spaniard Pol Espargaro, was also reduced to a nub of a race due to the tyre concerns, the original 25 laps cut to 13.
Spaniard Alex Rins won the Moto3 category. (Editing by Patrick Johnston)