Retiring captain Michael Clarke has guided cricketing superpower Australia to its fifth World Cup victory after it thrashed co-host New Zealand by seven wickets in the final at Melbourne Cricket Ground (MCG) on Sunday.

Clarke (74 from 72) was the standout batsmen for the home side as the world No.1 easily accounted for New Zealand's modest 183 with 101 balls to spare to confirm itself as king of the one-day format.

Steve Smith (56 not out), Australia's leading run-scorer for the tournament with 402, hit the winning runs with a pulled shot to the square-leg boundary before leaping into the arms of non-striker Shane Watson (2 not out) in front of the world record cricket crowd of 93,013.

New Zealand, playing its first Word Cup final, struggled to contend with the firing Australian pace attack, with a devastating spell by the player of the match, James Faulkner, triggering a late collapse of 7/33.

The Black Caps' big-hitting captain, Brendon McCullum, was one of five New Zealanders who failed to score, as the Australian quicks Faulkner (3/36), Mitchell Johnson (3/30) and Mitchell Starc (2/20) mauled the co-hosts.

Aaron Finch (0) exited early but a fearless 46 from 45 balls by David Warner kicked off a quick run-chase with lofted drives that cleared the New Zealand infield.

After Warner departed, new batsman Clarke, who announced his retirement from the one-day game on Saturday, struggled against sharp bowling and an aggressive field, but a boundary paddled over slips in the 19th over reminded New Zealand of the Australian batsman's skill.

He went on to score four boundaries, including one six, and his 112-run stand with Steve Smith was only broken by the skipper himself who played onto his stumps.

Smith, who was left out of the team's one-day tour against Pakistan only six months ago, played another calm and composed innings in what was his fifth consecutive half-century.

Kiwi quicks Matt Henry (2/46) and Trent Boult (1/40) unable to inflict the critical damage needed to defend the paltry total.

On a pitch which has resulted in scores of 300 every match, Brendon McCullum elected to bat but his early swinging accounted for nothing when a first-over yorker by Mitchell Starc had the New Zealand captain bowled for a three-ball duck.

After Martin Guptill (15) played around a Glenn Maxwell top-spinner and Kane Williamson (12) spooned the ball back to Mitchell Johnson, New Zealand were on their knees at 3/39.

Grant Elliot (83 from 82 balls) again answered his country's calls for a hero as he and Ross Taylor fought hard to establish a 111-run stand that revived New Zealand.

The co-hosts could have dropped to 4/66 but Elliot, the semi-final savior against South Africa, successfully challenged his LBW dismissal that was shown to go down leg side.

The Black Caps went without a boundary for almost ten overs but Ross Taylor (40) and Elliot's unwillingness to yield saw the Kiwis primed for an onslaught in the final 15 overs at 3/150.

However, the introduction of James Faulkner and his bag of tricks for the batting powerplay immediately sliced open New Zealand.

The opening delivery, a yorker slow and wide, saw the searching Taylor caught behind by a diving Brad Haddin while new batsmen Corey Anderson (0) failed to keep out a quicker yorker two balls after.

Starc, player of the series for his 22 wickets at an average of 10 runs per wicket, continued the carnage from the other end when Luke Ronchi edged for a four-ball duck.

In what could be his final international match, 36-year-old Daniel Vettori (9) did his best to patch together something of substance with Elliot but the pair could only put on 16 before a hooping Johnson yorker bowled Vettori and exposed the New Zealand tail.