Australia had arrived in Colombo in number-one position on 118 points. But following loses by 106 runs in Pallekele, 229 runs in Galle and 163 runs in Colombo, Australia have joined England on 108 points but is ranked above Alastair Cook's side, while Sri Lanka have jumped to 95 points, the International Cricket Council (ICC) said in a media release on Wednesday.
Australia's drop means India have become the number-one ranked side on the ICC Test Team Rankings, while Pakistan have moved into second position - just one point behind.
India had started the year as the top-ranked side before Australia reclaimed the position following its 2-0 win over New Zealand in New Zealand.
For Pakistan, this is the second time in less than a year that they have peaked to number-two position. After defeating England by 2-0 last year in the United Arab Emirates, Pakistan had risen to second position for the first time since the current rankings system was introduced in 2003.
To retain number-one ranking, India will now have to win the fourth and final Test of the four-Test series against the West Indies, which begins in Port of Spain on Thursday, 18 August. India's failure to win the Test will mean Pakistan will become the number-one ranked side for the first time.
If India win the fourth Test, then it will finish on 112 points - one ahead of Pakistan - but it will end on 110 points if the Test is drawn or on 108 points in fourth place in the case of West Indies earning a consolation win.
As regards Sri Lanka, it has been a magnificent effort by Angelo Mathews' side. It had entered the series in seventh position on 85 points, but has climbed to sixth position after earning 10 points. It now leads South Africa by three points, which has a series against New Zealand starting in Durban on Friday, 19 August.
The Test team rankings are updated at the end of each series. The ODI and T20I team rankings are updated after each match.
ICC Test Team Rankings (as on 17 August, after Sri Lanka-Australia series)
(Read as Rank, Team, Points)
1. India 112
2. Pakistan 111
3. Australia 108 (-10)
4. England 108
5. New Zealand 99
6. Sri Lanka 95 (+10)
7. South Africa 92
8. West Indies 65
9. Bangladesh 57
10. Zimbabwe 8