Down 25-6 at half-time, the Waratahs were struggling big time and coach Daryl Gibson was brutally honest about what needed to come.

"We're in a fight for our lives in the next 40 minutes and we need to stand up," Gibson told Fox Sports at half-time.

You get the sense Gibson's television interview - through gritted teeth - was a tenth of the serve he gave his players in the sheds.

The irony was that NSW were down by 19 points at the main break because the Rebels were playing for their lives.

Reece Hodge's two first-half tries put them in prime position to get their first win of 2017, but four second-half tries to the Waratahs, finished off with a Horwitz five-pointer in the dying seconds, saw the visitors score 26 unanswered points to break the Rebels hearts.

In the Waratahs coaching box, Gibson had a grin from ear to ear, while scrum coach Cam Blades banged his hands on the desk in front of him, ecstatic knowing how close NSW had come to a crisis.

"What I am proud about is the character the boys showed, to come out and dig in, that's really pleasing given our predicament," Gibson told Fairfax Media. "That's an excellent springboard towards getting some belief and confidence.

"There's a great sense of pride there. In the first 10 minutes, I felt we were looking good and then we let the Rebels off the hook with easy mistakes and poor ball control. We dug ourselves into a massive hole."

Waratahs captain Michael Hooper expressed his relief after the match.

"It's pretty rewarding," Hooper said. "The position we were in at half-time and then to come out and break out of the shackle [was great]. I feel like I've been bumping my head against a wall telling you guys repeatedly that we are training well but we haven't been able to do it in the games."

So would the Waratahs prefer the good news or the bad news first?

The good news is they can leave Melbourne with a valuable four points.

Their back line showed genuine attacking potency in the second half, particularly from returning fullback Israel Folau and Bernard Foley in his first game of the year.

"He obviously gave a lot of fluency. I thought at times he was a little rusty, a couple of errant passes there," said Gibson of Foley. "But I thought on balance, first game back after a four-week lay-off, he was excellent.

The bad news? Things aren't going to get easier. The Crusaders are undefeated with five wins from five starts and come to Sydney next week. We all remember what happened last year.

To make matters worse, the following week NSW will travel across the ditch and face last year's champions, the Hurricanes, who spanked the Rebels 71-6.

With a bye to follow the week after, there is the very realistic chance the Waratahs could only have two wins to their name after eight weeks if they don't give a better account of themselves for the full 80 minutes.

"Our task next week gets tougher but we enjoy playing Kiwi teams, something to look forward to," Gibson said. "It's the kind of victory you build from.

"I'm really thrilled for the boys. It gives them a great deal of confidence and it shows them when we hold the ball and we don't make errors and mistakes that we can be a very good football team."

It was the Rebels that gained an early three-point lead when Tolu Latu was pinged for having a hand in the ruck but a dominant Waratahs scrum earned a penalty on the 10 minute-mark to then level up at 3-3.

After what was arguably of the most energetic and frenetic opening quarter to an Australian derby this year, Rebels No.12 Reece Hodge used his nous and a superb right-foot step to give the Rebels their first try of the evening.

Knowing full well a tiring Latu and Will Skelton were front of him, Hodge attacked the line and squeezed through a gap before putting the burners on to ultimately give the Rebels a seven-point advantage.

Another try out of seemingly nowhere. Sound familiar?

The boot of Hodge, however, would have plagued the Waratahs though, for his crisp long-range sent a clear message that any infringement in NSW's half would most definitely spell more points on the scoreboard.

But it was a five-pointer to Rebels centre Tom English, set up by fullback Jack Debreczeni, in the 31st minute that got the strong Melbourne crowd out of their seats to put the home side up 20-6.

Then two minutes later Hodge sliced through disorganised NSW defence to put the margin to a whopping 19 points at half-time.

It was the Rebels' biggest ever first-half lead and doubled as a two-fingered salute to the critics who say the Melbourne franchise should be kicked out of Super Rugby next year.

However, from the outset of the second half, the Waratahs' carries were better and back-line fluency far better.

Momentum appeared to swing. The Rebels looked tired. New No.6 Ned Hanigan, somehow on the left wing, bulldozed over the top of Marika Koroibete to score his first Super Rugby try and reduce the deficit to 25-13 after 50 minutes.

Next it was Reece Robinson to score on the right wing to give the Waratahs even greater hope, and when Horwitz dived over, the crisis had been averted, for now.

MELBOURNE REBELS 25 (Reece Hodge 2, Tom English tries; Hodge 2 conversions; Hodge 2 penalties) defeated by NSW WARATAHS 32 (Ned Hanigan, Reece Robinson, Michael Wells, David Horwitz tries; Bernard Foley 3 conversions; Foley 2 penalties) at AAMI Park, Melbourne.