Cameron Smith is adamant he can still make an unlikely charge at the Australian Open after an encouraging second-round 68 ensured he would play into the weekend.

A week after flopping and tearfully missing the cut at the Australian PGA Championship in Brisbane, Smith shot three under at The Australian on Friday playing alongside tournament leader Min Woo Lee.

The 2022 British Open champion remains eight shots off the lead heading into Saturday and, while his long game showed signs of improvement, the Queenslander's putting left him frustrated as he seeks to win a maiden home crown.

No hole summed up his issues with his short game more than on the par-4 17th.

On the green and going for par, Smith dragged an eight-foot putt wide of the hole and threw his ball away in disgust.

"It was a lot better today and I could have scored way less to be honest," Smith said.

"I did everything I needed to do today except hole the putts.

"To walk away with five after a perfect drive (on the 17th hole) is pretty frustrating.

"There are a lot of uncomfortable shots around here but there were no real problems with the longer shots, the putts just didn't drop.

"I hit a lot of good putts at good pace but they were just missing."

In Smith's defence, the highest-ranked player in the field finished the day with five birdies, only bogeying on his opening and penultimate holes.

But Smith knows he will have to conjure up some magic if he is to have any chance of reeling in Lee.

His fellow Australian was met with an increasingly rowdy reception from the crowd through the back nine and Smith said Lee would be near-impossible to catch.

"Min is playing some pretty great golf so it's going to be tough to chase him down," Smith said.

"It's going to take my best to even get close and maybe even a little bit of help.

"There's still lots of golf left and I feel after how I played today I can still make a run at least."