The visitors stunned Israel and silenced the 40,000 capacity crowd with a goal from Bruno Alves in the second minute, but the home side eventually settled down and got back on level terms in the 24th minute through Tomer Hemed.
They then forged a promising lead with goals by Eden Ben Bassat in the 40th minute and Rami Gershon in the 70th.
But a determined effort by Cristiano Ronaldo, who powered into the Israel area, set up Helder Postiga to reduce the arrears to 3-2 in the 72nd minute and the equaliser was scored by Fabio Coentrao as the visitors laid siege to the goal.
He stuck his foot out as Israeli defender Yuval Shpungin tried to clear the ball off the line.
Israel and Portugal have eight points from five matches, four behind unbeaten group leaders Russia, whose game against Northern Ireland in Belfast has been postponed until Saturday due to snow.
"The fact that I am so disappointed after a 3-3 draw with Portugal says everything," said Israel coach Eli Guttman.
"We saw a cohesive team that is mentally strong and able to overturn a deficit into a promising lead but we lost concentration after we scored the third goal, as if thinking that the situation was too good to be true and we let [Portugal] back into the game," the downcast coach added.
Portugal coach Paulo Bento said he was generally pleased with his players' performance.
"We started well, although we lost our rhythm and conceded two goals... overall I think we did enough to win the match, we had the majority of goal chances, Israel had three chances and scored three times," he said through an interpreter.
"Having scored a goal in the last minute we could say that we had won a point, but looking at the way we dominated and played, these were two points lost," he added.
Bento thought Portugal's qualifying campaign had been complicated by the draw "but it all depends on us," he said.
The nine group winners in Europe qualify directly for the 2014 World Cup finals in Brazil. The eight best runners up will go into a play-off round with the four victors taking the remaining spots.
