Alloa quashed Queens` hopes of securing a play-off spot on Saturday following a hard-fought draw.
The Wasps took the lead five minutes before the break through Ben Gordon but two goals after the restart looked to have given Queens the vital three points needed to finish fourth.
But Liam Buchanan`s strike sent James Fowler`s side packing with a 2-2 draw to extend the lead on fifth placed Falkirk to five points with two games remaining.
Alloa were buoyed by their 3-0 victory over Dumbarton last week as Danny Lennon took charge of his first game for the Wasps.
But Queens have came off the back of eight great days - having beat Hibs, Rangers and Falkirk to all but secure fourth place in the Championship.
Palmerston gaffer Fowler made two changes from the team which knocked off Falkirk 1-0 last week - with Mark Millar and Mark Durnan replacing Ian McShane and Lewis Kidd.
The hosts started stronger with Cawley and Spence creating half chances but on a sunny day in Clackmannanshire, the chances were few and far between.
Buchanan had the game`s first real effort after half an hour but the Wasps` top scorer should have done better with his volley.
Five minutes before half time, Alloa took the lead through a Gordon header. Iain Flannigan swung his corner in to the danger zone and Gordon leapt above everyone - and despite Zander Clark getting a hand to it, Alloa found themselves in the lead.
When Referee Stephen Finnie blew the whistle for half time it was a relief for the Doonhamers who needed to get out of first gear.
And within five minutes, Queens had switched on for the first time all day. Derek Lyle played a beautiful ball over the top to Danny Carmichael who weaved his way past three defenders before being dragged down in the box. Lyle stepped up to smash the ball past the diving John Gibson.
Meggat sticks out a leg to bring Carmichael to the ground and hand the visitors the penalry
Lyle`s spot kick is unstoppable
James Fowler`s half time team talk worked wonders for the Doonhamers as they found themselves in front after 52 minutes. Carmichael was the architect once again and this time he left Kevin Cawley in his dust as he raced ahead before delivering a superb cross in to Millar`s path. The midfielder chested the ball before calmly slotting Queens in to the lead - as well as bagging his first for the club.
Miller fires home
Just as the visitors looked to have steadied the ship, the back four were under siege. And eventually the pressure took its tool and Alloa equalised.
It was classic counter-attacking football from Danny Lennon`s side as Buchanan lead the charge and found the bottom corner from the edge of the box. The sprawling figure of Clark failed to get near it and the hosts continued to scrap for survival in the Championship.
Clark cant stop Buchanans effort
But it`s the top end of the table that concerns Queens and James Fowler wasn`t intent on leaving the Indodrill with only a point. He threw on Iain Russell and the winger almost scored on his return from injury.
Holt swung the ball towards Carmichael who chested in to the path of Russell but the former Alloa hitman failed to hit the target from five yards out. From the resulting corner, Lyle had the chance to regain Queens` lead but his volley sailed inches past the top right corner.
The Doonhamers task became a lot tougher as Millar went from hero to zero in the dying minutes when he was sent off. An off the ball scuffle appeared to anger Michael Doyle and a clash of heads gave whistler Stephen Finnie no choice but to give the goalscorer his marching orders.
Smith goes close in the dying seconds with a diving header just past the post
It may not have officially sealed the final play-off place but a win next week against Dumbarton at Palmerston will finally cement the Doonhamers place in the promotion race. And after waiting 34 games, what`s the harm in waiting one more?