Australia played well for much of the match against the South Americans but had no reply to goals in each half from Andre Carrillo and Paolo Guerrero.
Australia must beat Peru on Tuesday to have any chance of going further.
With just one point from two games, the Socceroos' chances of advancing in Russia now appear slim.
A gut-wrenching 2-1 defeat to France in their Group C opener has left the Socceroos targeting a win on Thursday as they seek to qualify from the group stages.
Australia talisman Tim Cahill may have to settle for a World Cup cameo role while captain Mile Jedinak could start on the bench.
After a cagey first half, the game unravelled for Honduras when Jedinak, struck three times in the last 36 minutes.