The reigning champions are now equal with the Blues on 39 points thanks to six straight league wins but are arrears by one on goal difference with Jose Mourinho's men still to play Stoke City on Monday night.
The Spanish playmaker then doubled his season tally when sweeping home a pass from Aleksander Kolarov in the 61st minute before Yaya Toure wrapped it up nine minutes from time with an emphatic finish for his fifth of the campaign.
The loss was 17th-placed Palace's first in three outings but extended their winless run to five matches with their last triumph being on November 23.
Joleon Lescott headed Albion into the lead in the 10th minute with his first goal for the club before Silvestre Varela played a delightful give-and-go with Stephane Sessegnon to make it 2-0 ten minutes later.
However, Austin converted from the penalty spot in the 24th minute before drawing the R's level three minutes into the second half prior to his 11th league goal of the term which came courtesy of a powerful header in the 86th minute.
Harry Redknapp's have remarkably recorded all 17 of their points so far this season at home with five wins from nine Loftus Road fixtures but are yet to win on the road.
Christian Benteke opened the scoring with a stunning curling effort after controlling with his chest in the 18th minute before Radamel Falcao marked his fourth league start with his second goal for the Red Devils when heading home Ashley Young's cross eight minutes into the second half.
Villa forward Gabby Agbonlahor was then harshly sent off for a challenge on former teammate Young which denied the home side the chance to defeat Louis van Gaal's in-form side.
Swansea City managed to come up with a win on the road by edging Hull City 1-0 at the KC Stadium thanks to Ki Sung-yueng's 15th-minute deflection which came from a long range effort from Jonjo Shelvey.
The victory allowed Swansea to remain eighth on the table, a point behind seventh-placed Arsenal, who dropped after Tottenham won at home.
But Argentine attacker Lamela came up with an absolute beauty to open his Premier League account when cutting in from the right and rifling into the top corner in the 35th minute to give Mauricio Pochettino's side their fourth win in their past six league outings.
Romelu Lukaku headed in an own-goal from James Ward-Prowse's corner in the 38th minute prior to Graziano Pelle's eighth strike of the campaign in the 65th minute. Maya Yoshida then rounded out the victory in the 82nd minute when heading home Steven Davis' cross for just his second BPL goal.
And also in the capital, West Ham United went within a point of third-placed Man Utd by beating Leicester City 2-0 at Upton Park courtesy of goals from Andy Carroll (third goal in three matches) and Stewart Downing.
Sunday's fixtures pit Newcastle United against Sunderland in the Tyne-Wear derby while Liverpool host the Gunners at Anfield prior to the Monday night meeting between City and Stoke at the Britannia Stadium.
2014/15 Barclays Premier League - season scores
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