The Lions have migrated north to Noosa for a few days' rest and recuperation following their defeat in Melbourne. There is also an injury cloud hovering over their captain Sam Warburton, who will arrive on Queensland's Sunshine Coast on Monday after remaining in Melbourne overnight for a scan.
Farrell said: "We all realise it (next Saturday) is the biggest game of our lives and we'll see what comes of it. I wouldn't say Australia are in the driving seat. I would say they're very pleased - it was a do or die situation for them, and they rose to the challenge."
Farrell has no doubt the Lions will regroup ahead of the Sydney showdown. And they are also optimistic that centre Jamie Roberts and prop Alex Corbisiero will return to full training on Wednesday, putting them in contention for next weekend.
Wales international Roberts has yet to play in the Test series because of a hamstring problem, while England prop Corbisiero suffered a calf injury in the series opener at Suncorp Stadium.
"There are a few boys training tomorrow and they will go hard. The rest of the squad have a couple of days off and we'll train on Wednesday and Thursday," Farrell said. "People like Alex Corbisiero and Jamie Roberts will go hard tomorrow and hopefully be right for full training on Wednesday."
Farrell has dismissed any prospect of the Lions being fatigued as they approach the end of a 10-match tour that started in Hong Kong four weeks ago.
"Fatigue doesn't come into it with the enormity of the task ahead and what is at stake," he said.
"If you ask the players, they would play the game again tomorrow. They want to get straight back on the horse and get back at it. That's what big-game players want to do - get back at it straightaway. The disappointment is that we have to wait five or six days to put it right.
"We have always said that we've got a good squad and we believe in everyone within the squad. We will back everyone to the hilt and that is what we've done throughout this campaign. Whoever gets selected for this last game in Sydney, big-game players normally produce when it counts, and it counts no more than next weekend."
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- Jamie Roberts
- Sam Warburton
- Alex Corbisiero