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World No.1 Roger Federer might have noticed a distinct lift in his performance as he easily dispatched veteran Swede Jonas Bjorkman in straight sets on Day Three of the Australian Open 2007 but the nine-time Grand Slam champion's path to yet another major final is beginning to look much tougher thanks to the rise of a talented Serbian.

As Federer cruised into the third round with an easy win over the talented Bjorkman 6-2 6-3 6-2 - in a repeat of last year's Wimbledon semi-final, Serbian No.14 seed Novak Djokovic continued his hot start to the year with a 6-2 7-5 6-1 win over Spain's Feliciano Lopez on Vodafone Arena.

The pair is on course to meet in a potential fourth round blockbuster provided they come through their third round matches with Federer to first meet Russian No.25 seed Mikhail Youzhny, who downed Taipei's Yen-Hsun Lu 7-5 6-4 6-4 while Djokovic will meet Thai surprise packet Danai Udomchoke, who caused a boilover on Day Three by eliminating 2003 French Open champion and No.24 seed Spain's Juan Carlos Ferrero 7-6(0) 7-5 4-6 6-1.

But even Udomchoke's shock win was upstaged by another victory by popular Australian veteran Wayne Arthurs, who at 35 is the oldest player in the field and who has already announced he is playing his final Australian Open.

On a packed Margaret Court Arena, Arthurs electrified a full house with a 6-7(5) 6-1 6-4 6-4 win over American qualifier Zack Fleishman to reach the third round of his home Grand Slam for only the second time in nine attempts with the Australian Open being the only major in which the big-serving left hander has never reached the round of 16.

But he will never get a better opportunity to do that than in this his last Australian Open with his third round match to be against another unseeded American in Mardy Fish, who downed Frenchman Nicolas Mahut 7-5 6-4 3-6 6-4.

However it is the prospect of a showdown between the world's best player Federer and the game's most exciting up and comer in Djokovic that already has Melbourne Park fans salivating.

Djokovic, the 19-year-old who is seeded No.14 here, has cut his ranking from 676 at the end of 2003 to his current ranking of 15 in the past three years and last year picked up his first career titles, at Amersfoort and Metz, as well as starting this year by winning in Adelaide.

Such was the quality of Djokovic's play against Lopez he made just 19 unforced errors throughout the two hour match with even the great Federer admitting he will be keeping a close eye on the Serbian's third round match ahead of their expected showdown.

Djokovic also reached the quarterfinals at the French Open last year and is clearly revelling in the fanatical support he is receiving from Melbourne's large Serbian community.

"I will probably try to see more of the next match he plays," Federer said of Djokovic.

"He is definitely playing well and you know he's confident."

But Federer insisted his sole focus at present was on Youzhny, who last year reached his first Grand Slam semifinal at the US Open.

"He upset Rafa (Nadal) at the US Open and I've played him several times so I know what a great player he is," Federer said of the 24-year-old Russian.

"I've got to make sure I get through that one first."

Federer said he noticed a definite lift in his form against Bjorkman following his first round match against German Bjorn Phau.

"I was a bit more consistent, especially on serve," said Federer, who won 74 percent of his first serve points.

"I didn't give him (Bjorkman) so many chances like I did against Phau in the first round so I think it (his second round performance) was a bit of an improvement."

Djokovic for his part was also focused solely on his next round match but admitted his game had improved.

"Starting with a tournament win in Adelaide and two straight sets win in a Grand Slam, I can only be positive," he said.

"I'm really feeling pretty comfortable on court and motivated with nothing to lose really because I didn’t have such a great season last year in Australia so this year I can just win (rankings) points, win matches and improve on the ATP list."

On a day of few upsets there was little trouble for the other men's seeds in action on Day Three with No.6 seed Andy Roddick, No.16 seed David Ferrer and No.20 seed Radek Stepanek all progressing to the third round.

Stepanek had the most difficulty, coming from two sets down to beat fellow Czech Lukas Dlouhy 4-6 4-6 6-4 6-1 6-4 while Ferrer downed 2002 Australian Open champion Sweden's Thomas Johansson 6-2 6-7(5) 6-2 6-2 and Roddick wasted little time in downing Frenchman Marc Gicquel on Rod Laver Arena 6-3 7-6(4) 6-4.