Tim is setting the foundations for the rest of his career Paul Annacone

Henman hit more than 100 winners against Guillermo Canas and led by two sets but succumbed after five hours.

"Tim is doing a number of things better than six weeks ago and that's something positive," Henman's coach Paul Annacone told The Times.

"The plan is to keep building and if there are disheartening losses along the way, you just deal with those."

Henman has never gone beyond the fourth round of a Grand Slam other than Wimbledon, but he had high hopes of progressing in Melbourne after winning the Paris Masters in November.

Annacone, who began working with the British number one in December, admitted Henman was distraught after his loss to Canas, but said there were positive signs in his performance.

Stunned Henman laments loss

"This was a terrible one for Tim to take, but what we have done since Christmas is paying dividends, I have absolutely no doubt about that," he said.

"I wanted to make sure Tim saw the match again and the patterns of his play that emerged during it, which are imperative because he is setting the foundations for the rest of his career.

"There is a right and a wrong way to win and lose matches, but right now it is about a bigger plan, a belief in the philosophy of the way to play which is the right one.

"All you can in these circumstances is tip your hat to Canas because he was just relentless."