Another Aussie, 22-year-old Tamara Johns, fired a tournament-best 66 at Yarra Yarra Golf Club -- 10 shots better than her score from round two. She vaulted into a tie for fifth place at 1-under 215 with Becky Morgan of Wales, who turned in an even-par 72.
Webb, seeking her second Australian Open title after winning here in 2000, opened a two-shot lead over Pettersen with a 20-foot birdie putt at the 14th hole. She quickly gave the stroke back when she three-putted the 15th for bogey, and Pettersen tied the lead with a two-putt birdie at the par-5 16th.
The pair headed into the final round deadlocked after neither could take advantage of the par-5 closing hole. Pettersen's third shot from a greenside bunker resulted in a two-putt from 30 feet for par. Webb, who was left of the green with her second, chipped to 15 feet before missing her bid for birdie and the outright lead.
'I felt like I hit the ball better today, especially with my irons off the tee,' said Webb, 27, who was denied her fifth straight Australian Ladies Masters title last week after losing in a playoff to the top-ranked Annika Sorenstam. 'On the closing holes, I hit my driver better and got myself on the fairway. All in all I feel pretty good about things.'
The 20-year-old Pettersen was in command of her nerves despite going head-to-head with one of the most successful players in women's golf.
'I'm a little bit excited when I stand on the first tee with all the crowd, but I feel quite comfortable,' said Pettersen, last year's rookie of the year on the Ladies European Tour after capturing her breakthrough win at the 2001 French Open. 'The feelings that come through your head make you feel so strong -- that's why I play golf, it's the feeling I am looking for.'
Pettersen actually had the edge early in the round. She birdied the first hole to get to five-under par, but hit into the trees at the second and posted her lone bogey of the day.
Webb birdied the long par-3 third for the lead at 5-under, only to be joined there when Pettersen sank a birdie putt at the short par-4 fifth.
After holing out from a bunker for birdie at the seventh hole, Webb matched birdies with Pettersen at the par-5 eighth and took one-shot lead into the back nine.
Webb, whose victory at last year's LPGA Championship made her the youngest player and only the fifth woman in history to complete the career Grand Slam, was impressed by her young counterpart in round three.
'[Pettersen] played really well today,' Webb said. 'I'd not seen her hit a ball before, she hits it pretty strong and has a good all around game. She really thought her way around the course -- that is a step in the right direction.'
Crafter, winner of the 1997 Women's Australian Open, negated an eagle at the par-4 fourth with a double-bogey at the par-three 11th en route to a 2-under 70.
Gustafson carded a 5-under 67 that included eight birdies, a bogey and a double-bogey, also at the 11th.