The 26-year-old Belgian suffered the worst loss of her professional career as she was thrashed 6-0 6-1 by 19th seed Nadia Petrova under the lights of the Hisense Arena.
There was better news for Justin Henin and Yanina Wickmayer, who both secured victories to set up an all-Belgian fourth-round tie.
Last year’s finalist Dinara Safina was a straight-sets winner over Elena Baltacha while third seed Svetlana Kuznetsova had to come from a set down to beat unseeded German Angelique Kerber.
Eighth seed Jelena Jankovic also crashed out of the women’s draw when she lost to Alona Bondarenko, but the biggest surprise of the day was Clijsters’ capitulation against Petrova.
The Russian took just 18 minutes to claim the opening set and a shell-shocked Clijsters never recovered.
“This is something probably you want to forget as soon as possible and go home,” the 15th seed said.
“I was just questioning myself, just questioning myself out there a lot. I was trying to turn it around, but at the same time you don’t really know why is this all of a sudden happening? There were points where I really wanted to break my racquet into pieces.”
Henin fought back from a set and a break down against 27th seed Alisa Kleybanova to keep alive her bid to win a grand slam just a month after returning from retirement. The seven-time grand slam winner won 3-6 6-4 6-2 in two hours and 20 minutes and admitted afterwards she had narrowly escaped defeat.
Bondarenko claimed the biggest scalp in terms of seeding so far when she easily beat Jankovic 6-2 6-3.
Jankovic had won the previous nine meetings between the pair, but 40 unforced errors ensured her tournament ended prematurely.
Last year’s runner-up Safina laid to rest some of the demons of her final embarrassment to Serena Williams on Rod Laver Arena. The Russian stepped out on centre court for the first time since that 6-0 6-3 humbling and routed Elena Baltacha 6-1 6-2 in less than an hour to continue her rapid progress through the early rounds.
Meanwhile, defending champion Rafael Nadal endured a nervous night on Rod Laver Arena before eventually fending off the persistent challenge of Philipp Kohlschreiber in four sets.
The Spanish second seed was below his best against the 27th-ranked German whose heavy hitting, especially off the backhand side, caused Nadal problems all night. In the end Nadal simply took his opportunities better to win 6-4 6-2 2-6 7-5 in three hours and 39 minutes, but admitted afterwards he was disappointed with his display.
“The most important thing is I won, so I am happy for that,” he said.
“I am less happy about my game, what I was practising but everybody has a not very good day. I think I played much better in the fourth set than the rest of the sets. The second set a few moments I played well too. The first set and the third, I played bad. I need to play a little bit more aggressively for next matches.”
The left-hander will play big-serving Croatian Ivo Karlovic in the next round after he defeated countryman and 24th seed Ivan Ljubicic 6-3 3-6 6-3 7-6 (7/9).
US Open champion Juan Martin del Potro was also forced to battle as he edged past unseeded German Florian Mayer 6-3 0-6 6-4 7-5 as the temperature in Melbourne peaked at 32 degrees Celsius.
The Argentinian had needed five sets to overcome veteran American James Blake in the previous round and, after being stunned by Mayer in the second set, had to rally from 4-2 in the fourth to avoid going the distance again.
“Today, especially in the second set, I felt very confused with my game,” Del Potro admitted.
Fifth seed Andy Murray continued his march through the early rounds with a trouble-free 7-5 6-1 6-4 win over 64th-ranked Florent Serra.