
Ford ace Marcus Gronholm, who needs to win to keep alive his chances of a victory in the world championship, crashed out in an early setback to his campaign.
As Atkinson's chances went up in smoke after he crashed and sparked a fire, West Australian Dean Herridge in another Subaru was in fifth spot, shading his more illustrious countryman.
Heading into the second day Hirvonen's Ford led by 25.8 seconds from Atkinson's teammate Petter Solberg with Spanish Citroen driver Xavier Pons third.
Atkinson's crew was working desperately to repair his car in time for Saturday's opening stage after a dream start turned to a nightmare with the Australian sliding off the road.
Because other teams used their fire extinguishers - without which they could not continue to drive - to help put out the blaze, they could not continue and the day's fourth stage was cancelled.
Atkinson had demonstrated blistering speed to set the fastest time on the first three forest stages of the rally to take a 13.6 second buffer over Hirvonen.
But on the next stage the Queenslander drifted wide on a corner and became beached on the edge of the road.
Despite the efforts of co-driver Glenn Macneall and a group of on-lookers, they could not get the car going again.
Then heat from the exhaust set alight the shrubs on which the car had come to rest.
"We had a good start to the day today with the first three stage wins, but that's where the good news ended," Atkinson said.
"About halfway through the fourth stage we were on a medium-speed corner and the car stepped out just a bit and dug into some soft sand.
"We got stuck and it just wasn't possible to get it back going again.
"However the next thing was that the hot exhaust lit some small shrubs at the back and the car started burning.
"It doesn't look too bad, but well need to look it over properly in the service park and see if we can restart tomorrow."
Solberg had grabbed the lead later in the afternoon but said he could not press on as hard as he wanted because of dust clouds and surrendered to Hirvonen.
Gronholm, who must win here to have any hope of overtaking absent championship leader Sebastien Loeb, who is injured, led overnight after winning the two short opening stages in Perth on Thursday.
But he rolled his Ford shortly into Friday's first stage, bending the car's steering arm.
He was able to rejoin the rally, but his hopes of winning faded. His car was filled with dust and he needed a new transmission after slipping back to 40th place.
Another casualty was Norway's Henning Solberg, who crashed his Peugeot at 180 km/h while Britain's Matthew Wilson was forced to retire after hitting a rock and losing a wheel from his Ford on the first stage.
Source: AAP 2006