Striker Antoine Griezmann lashed home the historic spot kick in the 58th minute but Australia hit back with a penalty of their own when Samuel Umtiti inexplicably handled the ball in the box four minutes later.
Minutes later, they drew level through a penalty of their own - Samuel Umtiti with a freaky handball gifting Aston Villa's Mile Jedinak the chance to level things up.
Day 3 of the World Cup began Saturday with France becoming the first team to benefit from a penalty called after a video review in a World Cup match.
From lengthy delays, questionable decisions and a grand final goal that shouldn't have been given - the technology failed to win Australian football fans over.
Whilst the equalising goal momentarily blew wind into Australia's sails, a series of changes up front for France swung the game into Les Bleus' favour as they regained control of proceedings against their tiring opponents.
According to Griezmann, he even over-delivered, becoming the first French player to score in consecutive World Cups since Michel Platini found the back of the net in 1982 and 1986.
But Hannes Halldorsson guessed correctly and palmed away the Argentine skipper's side-footed effort and, despite intense pressure, Iceland held on for a famous draw in their debut at a World Cup finals.
Regarding the first-used VAR technology which helped France earn a penalty, the 49-year-old coach said "an error has been corrected" because of the new technology.
Jedinak scored the penalty to make it 1-1 before Paul Pogba scored the victor for France later on. No penalty was given, but at the next stoppage of play, VAR ruled that Griezmann was fouled and gave France a controversial penalty.
As it went, Australia weren't behind for long. "I think there were a lot of moments they didn't know what to do any more".
"If you lose with a penalty. and a lucky goal just before the end, " he said with a shrug of his shoulders, disappointment etched itno his every expression.
Kylian Mbappe became the youngest player to represent France at a World Cup at 19 years, 178 days.