The Irishman's two goals, along with further strikes from Kenwyne Jones and Cameron Jerome, set up an all-Premier League clash in the next round against Manchester City
Ian Holloway’s side had impressed throughout, but were unlucky to find themselves a goal down as the game entered its final minutes after substitute Kenwyne Jones had come off the bench to give the Potters an underserved lead.
However, with five minutes remaining, Palace were awarded their second penalty of the night, having seen Jermaine Easter’s earlier spot-kick saved by Thomas Sorensen, and it was left to substitute Glen Murray to beat the Dane and send the tie into extra-time.
With Crystal Palace tiring, Walters, who scored two own goals and missed a penalty in Stoke’s heavy defeat against Chelsea on Saturday, headed home Matthew Etherington’s cross to give the Potters the lead, before wrapping up the victory with a fine solo effort.
To add insult to injury, Cameron Jerome fired home a late fourth as Stoke claimed a comfortable victory, though the score-line flattered the Premier League side.
Tony Pulis’ men started brightly as they looked to bounce back from their first home defeat in nearly a year, but after struggling to create any chances of note, Palace soon started to take control of the tie, with Manchester United target Wilfried Zaha impressing in front of the watching Sir Alex Ferguson.
After Aaron Wilbraham had headed an early chance over the bar, Zaha soon began to run riot for Palace, bamboozling his way through a disappointing Stoke defence on numerous occasions, and it was the product of one of the young England international’s mazy runs which created the game’s first real talking point.
Jinxing his way into the penalty area, Shawcross hauled the 20-year-old to the ground, leaving referee Anthony Taylor with little choice but to award the penalty.
It was a case of third time lucky for Palace, with Zaha having already seen two previous penalty shouts turned down, picking up a caution for his efforts with his second attempt.
Easter stepped up to take the spot-kick, but was unable to beat Sorensen in the Stoke City goal, with the Dane diving down well to his left to push the 31-year-old’s effort onto the post and away.
With Zaha causing Andy Wilkinson endless trouble, Pulis withdrew the full-back towards the end of the first half in a tactical re-shuffle, but it was to no avail with Palace’s star-man being withdrawn himself at half-time.
The disappointing Peter Crouch was replaced by Jones as Stoke looked to open the scoring, and the Trinidad and Tobago international made an instant impact, having a shot deflected onto the post with virtually his first touch since coming on, before heading home from the resulting corner.
Murray’s late penalty took the fixture into extra-time, but Palace had no answer to Walters’ double and Jerome's late finish as Stoke ensured that it would be them and not the Eagles who would be facing Premier League champions Manchester City in the fourth round.