Madrid Open 2015: Roger Federer knocked out in shock defeat to young Australian talent Nick Kyrgios

Federer suffered a 6-7 (7/2), 7-6 (7/5), 7-6 (14/12) tie-break defeat in the second round

Roger Federer waves to fans after suffering defeat to Nick Kyrgios (Getty Images)

Top seed Roger Federer is out of the Mutua Madrid Open after he lost to young Australian Nick Kyrgios on The Manolo Santana Centre Court on Wednesday night.

The Swiss three-times winner claimed the opening set on a tie-break but Kyrgios proved a stubborn opponent and snatched the next two to book a place in the third round, saving two match points in the deciding set to win 6-7 (7/2) 7-6 (7/5) 7-6 (14/12).

Second seed Andy Murray had to wait until the early hours of Thursday morning, but he still managed to come through in difficult circumstances to beat Philipp Kohlschreiber 6-4 3-6 6-0.

Nick Kyrgios celebrates his victory over Roger Federer (Getty Images)

The 27-year-old Scot looked determined to get the match finished quickly, but Kohlschreiber dug deep and played some scintillating tennis to take it to a deciding set before Murray's superior stamina saw him close out the win.

Serena Williams saved three match points to beat Victoria Azarenka and book her place in the quarter-finals

Williams, who won the tournament in 2012 and again the following year, found herself 6-5 and 40-0 down in the deciding set but the Belarusian served three straight double faults as the American won 7-6 (7/5) 3-6 7-6 (7/1).

Federer reacts after suffering defeat (Getty Images)

The 33-year-old was quick to praise Azarenka after the thrilling contest and told the WTA website: "She's absolutely on her way back.

"It's so good to see a Grand Slam champion like her playing so well. I'm always rooting for her when she plays."

Williams set up a last-eight clash with Carla Suarez Navarro of Spain, who saw off seventh seed Serbian Ana Ivanovic 7-5 1-6 6-4.

Double defending champion Rafael Nadal progressed into the third round of the men's competition.

Third seed Nadal, looking for his fifth Madrid title in his home country, claimed a comfortable 6-4 6-3 win over Steve Johnson to set up a match with Simone Bolelli.

Seventh seed David Ferrer raced into the third round thanks to a 6-4 6-0 win against qualifier Albert Ramos.

He will face fellow Spaniard Fernando Verdasco, who saw off Marin Cilic of Croatia 6-7 (7/5) 7-6 (7/5) 6-3.

American John Isner beat qualifier Thomaz Bellucci of Brazil and sixth seed and 2012 runner-up Tomas Berdych set up a third-round clash with Jo-Wilfried Tsonga after he defeated Richard Gasquet 7-6 (7/3) 7-5.

Tsonga, seeded 12th, held on after losing the second set 6-1 to record a 6-3 1-6 7-6 (7/4) win over America's Jack Sock.

Bulgaria's Grigor Dimitrov and Argentinian Leonardo Mayer progressed, while Italy's Bolelli came back to claim a 4-6 6-3 6-2 victory against Luca Vanni.

Roberto Bautista Agut of Spain claimed a 7-5 6-4 win against Sam Querrey of the USA, Marcel Granollers beat Gael Monfils 7-6 (8/6) 6-7 (7/9) 6-4 and Kei Nishikori overcame Belgian David Goffin 6-2 4-6 6-4.

Elsewhere in the women's draw, defending champion and third seed Maria Sharapova survived a scare to see off Caroline Garcia 6-2 4-6 7-5 in a match that was taken to three sets at Caja Magica.

Fourth seed Petra Kvitova also progressed thanks to a straight-forward 6-1 6-4 victory over Russia's Anastasia Pavlyuchenkova.

Caroline Wozniacki was another seed to advance as she moved past Agnieszka Radwanska with a 6-3 6-2 triumph.

Czech Lucie Safarova saw off Italian Roberta Vinci, Romania's Irina-Camelia Begu claimed a 6-4 6-4 victory over Barbora Strycova and Russian Svetlana Kuznetsova edged Samantha Stosur 5-7 6-2 7-6 (7/5) .

PA