By Wayne Cole

SYDNEY, March 1 (Reuters) - Australia's economy rebounded sharply last quarter as commodity exports boomed while consumers and the government lifted spending, extending the resource rich nation's 25-year streak of uninterrupted expansion.

The local dollar rose a fifth of a U.S. cent after the Australian Bureau of Statistics reported gross domestic product (GDP) climbed 1.1 percent in the fourth quarter.

That handily topped forecasts of 0.7 percent and came as a huge relief after the third quarter's shock 0.5 percent decline. It also marked 102 quarters without recession, just one quarter short of the all-time record held by the Netherlands.

"So the third quarter dip was only a pothole after all and not the end of the world," said Michael Blythe, chief economist at CBA. "There's not a lot to complain about in these numbers, with a bounce in consumer spending the big surprise."

The recovery saved the political blushes of the conservative government of Malcolm Turnbull, which is riding low in the polls and might have come unglued at news of an actual recession.

Growth for the year also surprised at 2.4 percent, ahead of most of Australia's rich world peers.

The Reserve Bank of Australia (RBA) is counting on growth to pick up to around 3 percent this year and next, thanks in part to surging exports of liquefied natural gas.

Record-low interest rates of 1.5 percent are supporting consumer spending and home building, but the RBA is wary of easing further for fear of stoking already-hot house prices.

Figures from property consultant CoreLogic out on Wednesday showed prices in the major cities surged in February, taking the annual pace of gains to its highest since mid-2010.

Yet neither is there much pressure for a rise in rates given measures of inflation are near historic lows and wages are growing at a pace last seen in the recession of 1991.

(Reporting by Wayne Cole; Editing by Shri Navaratnam)