Tommy Miller's first half penalty looked like being enough to win the Blues three points until James Beattie equalised from the spot with two minutes remaining after Alan Quinn's handball. Town's penalty had also been awarded for handball and both were given by the same linesman.
Town made four changes from the team which lost at Birmingham in midweek. Jon Walters and Owen Garvan missed out due to a hamstring injury and illness respectively with David Norris and Tommy Miller returning to the starting line-up.
Gareth McAuley came back after his hamstring problem and perhaps surprisingly replaced Richard Naylor, starting alongside Alex Bruce for the first time. Moritz Volz came back at right-back with David Wright switching to the left and Ben Thatcher dropping out.
Blades striker Billy Sharp struck the game's first serious effort but hit the ball straight at Richard Wright from the edge of the box.
Town started slowly and the early period of the game was scrappy. On 13 former Sheffield United frontman Jon Stead eked out a shooting opportunity inside the area, but his strike deflected wide.
Chris Morgan, periodically booed by the home crowd for his recent challenge on Barnsley's Iain Hume, looped a long thrown sent towards him into the box to Richard Wright in the 17th minute with the game still a largely unexciting affair.
In the 24th minute Alex Bruce sent Darren Ambrose away down the left after a Blades corner. The on-loan midfielder whipped in a deep cross to Veliche Shumulikoski, but the Macedonian shot well wide on the volley.
Town started to get more and more into the game and a minute later Shumulikoski played in Norris on the right of the area, but the midfielder's effort flew across the face of goal.
The Blues continued to push and on 26 a loose ball fell to Pablo Couñago 25 yards out and the Spaniard hit a curling effort with the outside of his right boot which struck the post and cannoned to safety.
The visitors had a good chance to go in front in the 29th minute when Stephen Quinn, younger brother of Town sub Alan, crossed from the right and Brian Howard headed over from six yards when he should have hit the target.
Two minutes later Richard Wright made a superb double save from Billy Sharp from point blank range after the former Scunthorpe striker had been found from a corner, but the linesman's flag had already been raised.
But in general the Blues were continuing to have the better of what was often a very open game and in the 38th minute Matthew Spring made a superb tackle on Miller after Couñago had threaded him through in the area. From the corner, Bruce headed wide when unmarked and probably ought to have tested Paddy Kenny.
Town went in front in the 40th minute when Jon Stead's cross from the right struck Matthew Kilgallon on the hand. Referee Dean Whitestone waved play on, but linesman Justin Comley signalled for handball and the senior official pointed to the spot. Tommy Miller stepped up and struck a low, hard penalty to Kenny's right and into the corner of the net.
The Blues were just about good for their lead at the break after another sluggish start. Once the first 25 minutes were out of the way the Blues had started to look the more likely side and the goal was merited on their efforts.
Moritz Volz hit the second half's first shot, forcing Kenny to get across to his left to push the ball around the post in the 52nd minute.
Moments later, Kenny failed to deal with a corner from the Town left, the ball eventually finding its way to Bruce 10 yards out, the defender hitting a low shot which Gary Naysmith cleared off the line.
McAuley cut out Stephen Quinn's shot in the 63rd minute, deflecting the ball over the bar. From the resultant corner, Kilgallon flicked a header goalwards at the near post, but Richard Wright did brilliantly to get down to his left to save. Seconds later, Howard shot wide from the edge of the box.
Stead shot to Kenny from 18 yards, the keeper gathering at the second attempt, then a fine Town move ended with Couñago playing the ball across the edge of the area to Stead, but the former Sheffield United man's shot was too weak to test Kenny.
Norris shot over prior to Alan Quinn replacing Darren Ambrose on the Town left, then Stead continued his search for a goal against his old club with a high and wide effort after a Town break with a number of his team-mates well placed, before firing another strike past Stead's post.
With eight minutes remaining, Richard Naylor took over from Tommy Miller as the Blues looked to sit back and protect their lead with the Blades having thrown on an additional attacker in the shape of Darius Henderson. Naylor went in as a third centre-half looking after the ex-Watford man.
Stead's cross looped goalwards but Kenny claimed as the game moved into its final five minutes.
Just as Town looked to have claimed their third home win on the trot, James Beattie hit a shot from the edge of the area which Alan Quinn inexplicably stopped with his hands. Again linesman Comley was the man to give the penalty decision and Beattie coolly beat Wright from the spot.
Lisbie replaced Stead for the final minute plus injury time, but the nearest Town could come to a winner was Shumulikoski's shot which flew wide from 25 yards.
A disappointing result after the hard work had appeared to have been done. The soft penalty in the closing stages came at a time when United had a lot of the ball, but hadn't overly threatened, with McAuley, Bruce and Richard Wright particularly impressive.
Town looked to have shaded the game against one of the division's better sides and will rue a missed opportunity to move into the play-off places.
That said, it was a much better display than against Birmingham in midweek and but for Quinn's late error â€" and rather too many missed opportunities at the other end - would have resulted in a deserved three points.
Town: R Wright, Volz, D Wright, McAuley, Bruce, Miller (Naylor 82), Shumulikoski, Norris, Ambrose (Quinn 74), Stead (Lisbie 89), Couñago. Unused: Supple, Haynes. Att: 19,785.