New Zealand batsman Ross Taylor says the video umpire made a mistake to reprieve Nathan Lyon as the decision review system came under fire on Saturday.

The contentious call by Nigel Llong halted the Black Caps' charge in the third Test, allowing Australia to turn what appeared to be a sizeable first-innings deficit into a handy lead.

The verdict left the Black Caps bemused and there were loud jeers from the Adelaide Oval crowd after play was stopped for more than five minutes to review a catch which New Zealand had referred to the video umpire.

Australia were on 8/119, in reply to 202, with Lyon on zero. Lyon finished with 34 and shared in a 74-run stand with Peter Nevill - the highest ninth wicket partnership in Trans Tasman Tests.

Lyon had been given not out after his attempted sweep shot against spinner Mitchell Santner hit his shoulder and ballooned to Kane Williamson at second slip.

Initially defiant, Lyon began to walk to the pavilion after Hotspot technology had revealed a white mark on the edge of his bat but Llong was not certain the player had hit the ball. The Real-time Snicko failed to detect a sound as the ball passed the bat.

The situation descended into farce when Llong checked for a possible lbw but the wrong ball was shown.

Llong said he did not have sufficient evidence to overturn officiating umpire S Ravi's decision.

Harsh call: Kane Williamson makes a catch, while Ross Taylor appeals, believing they had claimed the wicket of Nathan Lyon.

"I've got no conclusive evidence about this. I've looked at everything I've got, I can't find anything to say he's definitely hit this," Llong told Ravi.

"No RTS, there's a mark on the bat but it could come from anywhere from a flash so give it not out."

Taylor was shocked how a video umpire could make a mistake despite having access to technology.

"You've got to ask Nigel that," Taylor said.

"That was one of the discussions the boys did talk about in the changing room. We can understand when umpires make the wrong decision on the field but once you've got so many different angles and what not you think more often than not - 99 to 100 per cent of the time - you're going to get the right answer. I guess we didn't today.

"The players were pretty confident it was out. The Hot Spot showed up, Lyon walking off and nearly getting to the boundary, I think it's had a big bearing on the match."

Taylor later joked later his match fee was in jeopardy, as his comments are likely to come under scrutiny from the match referee.

There was widespread condemnation of the decision.

"I don't believe what I just saw," former Australian Test captain Ian Chappell said on the Channel Nine telecast.

New Zealand all-rounder Jimmy Neesham said it was worse than the howler which cost Usman Khawaja his wicket at Old Trafford in the 2013 Ashes.

Former Test opener Chris Rogers was stunned Lyon could be given not out despite Hot Spot's finding, saying it defied common sense.

"So we're not using Hot Spot? There was a mark on the bat. What else could it be?" Rogers said on ABC Grandstand.

"He assumed he was out, so he walked off. All the NZ players assumed he was out.

"That's when players get disillusioned – when everyone on the field thinks it's out and it's given not out; it almost seems like there's no common sense."

Shane Warne slammed Llong, who is considered one of the best umpires in the international game.

"Horrible 5 mins of cricket & a terrible decision by 3rd umpire Nigel Long, clearly Lyon was out & not to mention the fact Lyon walked off," Warne tweeted.

"Obvious mark on hot-spot, Lyon clearly hit the ball on to his shoulder & he walked off the ground. Ridiculous waste of time & wrong decision."