Liverpool made one change with Sturridge coming into the starting eleven in place of Coutinho as they looked to secure a vital win but it was the hosts who started the better with Puncheon troubling the Liverpool defence before hitting off target.
Sakho headed wide at the other end from Gerrard's corner while Allen delivered a dangerous cross that found Johnson but the result was a shot over the bar. Liverpool did go in front after a Sturridge's effort deflected fro a corner and the resulting set-piece from Gerrard found an unmarked Allen who headed past Speroni for his first league goal of the season.
Speroni could have been beaten again on the half-hour when Suarez chanced from a free-kick but luckily for the stopper, the effort failed to trouble him while his opposite number did well to deny an equaliser when Jedinak tested him from long range.
Liverpool started well after the interval with Sturridge forcing a reflex save from Speroni with Suarez hitting over from the rebound, Gerrard found Sturridge with a superb pass allowing the attacker to run at goal and test Speroni with his effort gaining a deflection and beating the Palace stopper for a two goal lead.
Two soon became three as Sterling and Suarez combined with the latter firing a perfect finish past the near post to surely seal a win for his side and boost their title hopes. However, Palace responded superbly and began with a Delaney effort that got a wicked deflection that left Mignolet helpless.
Bolasie raced down the wing and crossed for substitute Gayle who side-footed past Mignolet to set up a tense finish which became even more stunning when Gayle collected a flick-on and swept past Mignolet to steal a point and leave Liverpool's title challenge hanging by a thread.