Phelps emerges after his victory in the 400m medley

The American's four minutes, 06.22 seconds improved his mark of 4:08.26 set at the 2004 Athens Olympics.

But Phelps was unable to go for an eighth gold after USA were disqualified in the 400m medley relay preliminaries.

Britain's Liam Tancock and David Davies took bronze medals in the 50m backstroke and 1500m freestyle events.

Tancock touched in 25.23 seconds with Gerhard Zandberg of South Africa taking gold in 24.98 and the silver going to Germany's Thomas Rupprath in 25.20. Britain's Matthew Clay finished fifth.

Polish teenager Mateusz Sawrymowicz won the 1500m freestyle final to end Grant Hackett's long stranglehold on the event.

Michael was doing something no-one has ever done before and everyone is disappointed USA team-mate Neil Walker

Sawrymowicz won the longest race on the programme in 14 minutes 45.91 seconds with Russia's European champion Yuri Prilukov second in 14:51.21 and Commonwealth champion Davies was third in 14.57.29.

Hackett finished seventh in 14:59.59 to suffer his first defeat over the distance in a decade.

Phelps had already claimed six titles in Melbourne going into the final day of the championships and was fully expected to win his final two events on Sunday.

In the individual medley race, Ryan Lochte took the silver behind Phelps in 4:09.74 while Luca Marin of Italy won the bronze in 4:09.88.

The event saw Phelps clock his fifth world record of the week.

"I didn't expect to be two seconds under my world record tonight," said the 21-year-old from Michigan.

Stunned Ian Crocker (left) and the Americans after being disqualified

"I knew this was going to be the hardest race. I was emotionally dead, almost physically dead and I had to step up.

"I didn't feel good this morning, didn't feel good in warm-up so I tried to block it out and think about what I did in training and use it in the race."

Phelps refused to be down-hearted after missing out on a chance for the medley gold after team-mate Ian Crocker was disqualified for leaving the starting blocks too early in the heats.

The Americans were overwhelming favourites to win the event and set the fastest heat time despite resting their best swimmers, including Phelps, for the final.

But Crocker, who swam the butterfly leg, left the blocks 0.04 seconds before Scott Usher had completed the breaststroke leg.

"Michael was doing something no-one has ever done before and I think everyone is going to be disappointed," said Neil Walker, who swam the concluding freestyle leg.

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"It is the way swimming goes sometimes, it's pretty exciting even in the preliminaries because every team out there is so fast, you don't want to be slow."

Phelps added: "It definitely wasn't intentional. They all wanted to swim and they all wanted to get us into the finals tonight and that's the goal but sometimes you slip and make a mistake."

Phelps and fellow American Mark Spitz in 1972 are the only swimmers to ever win seven golds at the worlds or Olympics.

American Jessica Hardy took gold in 30.63 in the final of the women's 50m breaststroke with Leisel Jones taking silver in 30.70 and Tara Kirk bronze in 31.05. Britain's Kate Haywood was seventh.

Tancock also won bronze in the 100m backstroke

Libby Lenton claimed the most gold medals by an Australian woman at a World Championship with her fifth win in the 50m freestyle.

The defending champion won in 57.15 ahead of Sweden's Therese Alshammar and Marleen Veldhuis of the Netherlands.

She finished the meet with golds in the 50/100m freestyles, 100m butterfly and the 100m freestyle and medley relays.

American Katie Hoff set the 15th world record of the meeting when she claimed gold in the 400m individual medley in a time of 4:32.89.

Hoff, 17, shaved seven tenths of a second off the previous mark of 4:33.59 set by Ukraine's Yana Klochkova at the 2000 Sydney Olympics.

The teenager also won the 200 IM gold and had fourth-place finishes in the 200m and 400m freestyle finals.

Russia's Yana Martynova took the silver in 4:40.14 and Stephanie Rice of Australia won the bronze in 4:41.19.