City thought they had the three points when Rodri's shot from the edge of the area touched off Thiago Silva past Chelsea keeper Robert Sanchez with four minutes left.

Chelsea, showing superb resilience, were not to be denied and Palmer - a £40m summer signing from Pep Guardiola's side - stayed cool amid the mayhem to beat Ederson from the spot to leave City just a point clear of Liverpool at the Premier League summit.

The reigning champions led in contentious fashion after 25 minutes when they were awarded a penalty for Marc Cucurella's pull on Erling Haaland, despite Chelsea's protests that the full-back had been fouled first.

Haaland dispatched the penalty with ease, but the hosts were level four minutes later when Brazil centre-back Silva glanced home Conor Gallagher's corner at the near post.

Chelsea turned the game around when Raheem Sterling also scored against his former club after 37 minutes, turning in Reece James' cross after Josko Gvardiol's mistake.

City, though, levelled on the stroke of half-time when the unmarked Manuel Akanji headed in Bernardo Silva's cross.

Two minutes after the break City went in front again when Haaland scrambled in Julian Alvarez's cross at the far post.

Yet Chelsea again battled back and deservedly drew level in the 67th minute when Nicolas Jackson pounced after Ederson pushed out Gallagher's low drive.

Guardiola's side thought they had won it with Rodri's stroke of good fortune - until the late penalty drama capped an entertaining, eventful encounter.

Defender Ruben Dias was penalised for a foul on Chelsea substitute Armando Broja and Palmer's calm finish left honours even.

Chelsea on the up with Pochettino progress

Chelsea - and manager Mauricio Pochettino - have not just had their most eventful week of the season, but their best week of the season.

The 4-1 win at Tottenham on Monday was overshadowed by the blizzard of Video Assistant Referee (VAR) interventions which reduced Chelsea's opponents to nine men before striker Jackson's hat-trick settled the outcome.

Here, the Londoners went toe-to-toe with Treble winners City in a magnificent, free-flowing eight-goal classic where no-one could begrudge them a point after Rodri's deflected shot looked like it would inflict a cruel defeat on Pochettino's men.

Their Argentine boss will understandably be dissatisfied with conceding four goals at home, even against a side of City's threat and calibre, but Chelsea showed quality and huge reserves of character to come from behind three times.

It was a measure of the improvement that can finally be seen in the side under Pochettino and they must take great confidence from the performance and result.

Just days after being left out of the England squad once again by manager Gareth Southgate, forward Sterling was outstanding as a scorer and creator, his constant running and skill on the ball a problem for City throughout.

And Palmer again demonstrated what he has added to Chelsea since his arrival from City with that late, late penalty.

The 21-year-old's arrival has certainly been Chelsea's gain and he has been a real bright spot despite their indifferent early-season results.

On this evidence, the club are on the right track under Pochettino - even if there have been bumps in the road.

City show vulnerable side as leads slip

City played a full part in one of the outstanding games of this season but will surely leave Stamford Bridge nursing a sense of disappointment.

They led on three separate occasions so this will feel like two points lost rather than one gained.

It would have been harsh on either side had they lost following a game containing such rich quality.

Yet City will believe they should have got a 10th league victory this season over the line, having lost the lead three times and the last occasion being the Palmer penalty conceded deep into eight minutes of added time.

Chelsea attempted to match City's intensity with their tactics and the champions looked vulnerable at the back throughout, never holding their lead comfortably at any time.

Haaland, inevitably, was on target twice and while City always looked dangerous going forward they were uncertain at the back.

Their lead at the top of the Premier League table is slender at just one point and sets up a momentous meeting with Liverpool at Etihad Stadium on Saturday November 25 when the Premier League resumes after the international break.