It restored spirits at Bramall Lane which had been dampened by a 2-1 home defeat by West Bromwich Albion - from the bottom half of the table - the previous week.
This left the Blades in fourth place on 68 points behind runaway leaders Bolton on points, Danny Wilson’s Barnsley with 73 and Wolves on 69.
Vistors Palace were themselves bidding for a play-off place so United could not afford any complacency going into the game.
But they stamped their authority on procedings from the start, and led after just three minutes.
The Blades opened with a flurry of attack, bringing panic into the visitors’ defence and a third minute penaly for the hosts after a push on Hutchinson.
Despite a delay caused by protests at the award and jostling among the players, Mitch Ward stepped up calmly to slot the ball home in front of a delirious Kop.
Palace responded wih spirit and a period of exciting end to end enertainment followed to delight the sun-drenched crowd.
And there was more joy for he 20,000 crowd as United doubled the lead afer 20 minutes.
A great break down the left by Katchouro split the defence and alhough the chance looked to be going to Whitehouse a kind break for United saw it drop to Jan Age Fjortoft who scored wih ease.
Palace might have pulled one back but Kelly denied Dyer with a fine one-handed save.
And the visitors gave United some anxious moments in the second half and they were grateful to some more fine work by keeper Kelly.
But they completed the scoring in injury time when sub David White scored afer a cross by Katchouro.
The Sar’s Tony Pritchett summed up the mood at Bramall Lane after the win
“Inspired by Kelly’s supreme goalkeeping standards, by Katchouro’s non-stop running, by Fjortoft’s remarkable goalscoring record and the tigerish pair of Ward and Henry in midfield , United steadied the slide, calmed the nerves and swept away the panic that was creeping into the club from the Boardroom to the Kop.
Delighted boss Howard Kendall said: “We showed a good crowd that we can play.
“It looks comfortable, 3-0, but I would not like my goalkeeper to be as active as that again. I like to watch a game with my goalkeeper unemployed but Alan Kelly was absolutely magnificent.
“We got this result at the end of a good week. We worked with players we knew would be playing and it was obvious they were up for it.
“I sent them back at the whistle to salute he fans; we want to keep this crowd.
“The crowd can do so much but the players hve to realise that it is down to them to go and generate enthusiasm.
“The passion of the team has to match the passion of the supporters which I think they did.
“I don’t like to single people out but look at Mitch Ward, a lad who sometimes is taken for granted.
“Wherever I ask him to play he does the job; Nick Henry alongside him had his best game since joining the club.
“He broke things up, won tackles, played it nice and easy. I knew what Henry could do and bring to the team.”