Madrid looked in all sorts of trouble as Walter Pandiani's first-half hat-trick put UEFA Cup finalists Espanyol 3-1 up at half-time at a stunned Bernabeu.

But the hosts mounted a second-half onslaught on the Espanyol goal, scoring twice in quick succession before winter signing Higuain claimed the headlines - and the points - by slotting home only his second goal for the Spanish giants in the 89th minute.

That strike was enough to send Madrid to the top of the standings, although Barcelona can reclaim that position if they beat Real Betis on Sunday.

Madrid, unsurprisingly for a team who had won six of their previous seven league outings, started confidently with Ruud van Nistelrooy having the game's first effort inside 90 seconds.

Picking up the ball on the edge of the Espanyol box, the Dutchman - La Liga's leading scorer - fired in a hook shot that visiting goalkeeper Carlos Kameni gathered at the second attempt.

Madrid dominated possession early on and a Roberto Carlos cross only narrowly evaded Raul and Van Nistelrooy with the Espanyol defence flagging.

However, the home side were knocked back on their heels as Espanyol scored twice in the space of 12 minutes with their first two chances of the match to go 2-0 up.

Both goals were virtually identical, with Francisco Rufete breaking away down the right before crossing for Pandiani to produce two superb left-footed finishes into the roof of Iker Casillas' net.

Nobody could have predicted such a scoreline and you could hear a pin drop among the home fans at the Bernabeu stadium.

Madrid did not take long to get the crowd going again though, with Van Nistelrooy pulling the deficit back to 2-1 in the 29th minute - just three minutes after Pandiani's second.

Raul dinked the ball into Roberto Carlos inside the area and his flicked header was rammed home by Van Nistelrooy from close range for the former Manchester United man's 21st league strike of the season.

The home side's joy was short-lived though as Pandiani struck again to complete a brilliant hat-trick in the 34th minute.

Moha created the chance, jinking forward before laying the ball across the edge of the Madrid area, where Pandiani curled a left-footed strike in off Casillas' right-hand post.

The Madrid players were furious, claiming an offside, but the goal stood as the hosts went into the interval trailing 3-1 and their title dreams seemingly in serious trouble.

Madrid coach Fabio Capello made a double change at the break, sending on Jose Antonio Reyes and Ivan Helguera for Cicinho and Guti, but without the suspended David Beckham and Robinho, the home side's attacking options were limited.

Reyes had a great chance to reduce the arrears in the first minute after the re-start, but he fired into the side-netting having been put clean through on the left-hand side of the area.

Madrid were not made to rue that miss for long though as just four minutes later Raul made it 3-2.

A Roberto Carlos cross was flicked on by Van Nistelrooy and Raul, running in at the far post, controlled the ball before firing a right-footed volley under Kameni.

Raul, Reyes and Roberto Carlos then all spurned promising positions as Madrid began to turn the screw, before Reyes deservedly drew the hosts level in the 56th minute.

A hopeful pass forward created confusion in the home defence with Kameni charging out and colliding with his own defender, and Reyes was on hand to slot the ball into an empty net after it had run loose.

Shell-shocked Espanyol finally recorded an effort on goal in the 62nd minute, although Luis Garcia's free-kick caused few problems for Casillas.

That was a brief foray forward for the visitors in the second half though, and they were forced into more defending soon after when Van Nistelrooy had a chance at the far post, with Kameni saving well.

Kameni then stopped a Higuain effort, before Luis Garcia missed a great chance for Espanyol in the 80th minute when he lost the ball attempting to round Casillas instead of taking a shot.

Madrid looked like they would have to settle for a point as time slipped away, but Higuain had other ideas.

He won the ball superbly on the right before trading passes with Reyes, racing into the area, and then slotting home at the near post to send the Bernabeu into ecstasy and put Madrid on top of the table.