Wales kept their pursuit of back-to-back Grand Slams on course but were made to battle all the way by England in a thrilling Six Nations encounter.
Paul Sackey's try and an Andy Goode drop-goal saw England trail just 9-8 at half-time, Wales' points kicked by Stephen Jones and Leigh Halfpenny.
Halfpenny scored Wales' crucial second-half try, with England's indiscipline letting Jones extend his side's lead.
Delon Armitage scored a fine try to give England hope, but Wales held firm.
England, short on form and confidence despite last week's win over Italy, arrived in Cardiff as huge underdogs and the early signs were not encouraging.
Armitage tried a long-range drop-goal with just 30 seconds on the clock, but his poor effort ended up well wide and simply handed possession to Wales.
The home team picked up where they left off in Scotland, speeding through the phases to threaten the visitors' try-line and when Phil Vickery gave up a penalty at a ruck and fly-half Jones stroked the simple kick for a 3-0 lead.
That lead almost doubled on eight minutes when Wales called on the greater range of Halfpenny's boot from 47 metres, but his effort was just wide.
Gatland praises Wales character
Wales were full of attacking verve, with Lee Byrne, Jamie Roberts and Mike Phillips all making half-breaks as England - kicking away possession time after time - held on.
The possession England had was largely kicked away, giving Wales ample opportunity to counter with ball in hand.
Referee Jonathan Kaplan had already lectured England captain Steve Borthwick over his side's persistent infringing at the breakdown.
But the message was not heeded and Mike Tindall was sin-binned soon after for using his hands in the ruck, with Jones converting the penalty to give Wales a 6-0 lead after 16 minutes.
Not even the set-piece provided any respite for England, as Kaplan penalised Vickery for dropping the scrum before Halfpenny stepped up to convert the 40-metre penalty.
England needed some inspiration and it came in the form of Riki Flutey, as the Wasps centre jinked through midfield to give his side a target going forward.
The forwards recycled quickly and when the ball was spun right, Goode dabbed through a delicate kick for Sackey to chase.
The Wasps wing won the race against Mark Jones to the line to touch down the ball first, although Goode hooked the conversion attempt.
But the Brive stand-off made amends soon after with a huge drop-goal that cut England's deficit - incredibly given their paucity of territory and possession - to just 9-8.
With England's confidence levels visibly rising and Wales still intent on running crisp attacking lines, the sell-out crowd was treated to a genuine contest far removed from the one-sided affair some had predicted.
That was thanks in part to a clever defensive tactic employed by England to limit the threat of Wales centre Jamie Roberts, with Goode packing down in England's back-row, to allow the outstanding Joe Worsley to shore up the tackling in the backs.
A one-point game at half-time soon tipped in Wales' favour as Roberts broke away down the right to carry his side deep into the England 22.
England killed the ball at the ruck and it was Goode, lying over the ball, who was sin-binned while Stephen Jones stroked over the resulting penalty.
Wales then made their man advantage in the backs pay, and Byrne drew Mark Cueto to give Halfpenny an uninterrupted run to the line for an unconverted try.
Missed chances disappoint Johnson
The absence of their fly-half also hurt England in the kicking stakes, as a long-range penalty within Goode's range was taken on gamely - but missed - by Armitage.
A fourth Jones penalty extended Wales' lead to 20-8, before England boss Martin Johnson brought Toby Flood off the bench in Goode's place with 25 minutes remaining.
Flood's arrival galvanised the England backline and a series of breaks created space on the left for Armitage, who weaved his way under the posts for a vital seven points.
Then a kick by Harry Ellis, the scrum-half spotting space in behind Mark Jones' wing, saw Sackey race away in pursuit only to fail to gather the ball with the line at his mercy.
But still England's indiscipline undermined their efforts and Jones was presented with another kickable penalty, taking Wales 23-15 ahead and crucially two scores clear.
Flood missed a late England penalty chance that would have set Welsh nerves jangling and next up for Warren Gatland's unbeaten side is France in Paris in a fortnight.
England, meanwhile, have an equally tricky trip to Ireland but will travel with greater confidence after a much-improved performance.
Wales: Lee Byrne; Leigh Halfpenny, Tom Shanklin, Jamie Roberts, Mark Jones; Stephen Jones, Mike Phillips; Gethin Jenkins, Matthew Rees, Adam Jones, Ian Gough, Alun-Wyn Jones, Ryan Jones (capt), Martyn Williams, Andy Powell. Replacements: Huw Bennett for Rees (66), John Yapp, Luke Charteris, Dafydd Jones for Powell (60), Dwayne Peel for Phillips (73), James Hook, Andrew Bishop.
England: Delon Armitage; Paul Sackey, Mike Tindall, Riki Flutey, Mark Cueto; Andy Goode, Harry Ellis; Andrew Sheridan, Lee Mears, Phil Vickery, Steve Borthwick (capt), Nick Kennedy, James Haskell, Joe Worsley, Nick Easter. Replacements: Dylan Hartley for Mears (65), Julian White for Vickery (65), Tom Croft for Kennedy (55), Luke Narraway for Haskell (54), Paul Hodgson, Toby Flood for Goode (53), Mathew Tait for Sackey (65).
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