After a poor first-half display, Mel's side found themselves two goals down at the break thanks to strikes from Palace new boys Tom Ince and Joe Ledley.
West Brom pulled one back immediately after the restart through Thievy Bifouma but were dealt a sucker punch in the 69th minute when goalkeeper Ben Foster was adjudged to have brought down Marouane Chamakh inside the area.
Referee Chris Foy pointed to the spot and Chamakh tucked the penalty away to seal victory for Palace, leaving Mel to cut a frustrated figure as his side dropped into the Premier League's bottom three.
"Of course the penalty decision was laughable," he told reporters "If it was a penalty then it would have been a red card and I think that the penalty decision really did prevent us from getting anything from the game.
"In the previous piece of play Julian Speroni made a great save and that would have made it 2-2 so the penalty decision killed us off really.
"If it was a penalty then we wouldn't be able to say anything about it but it was an error from the referee."
Mel also expressed his displeasure at the way his side performed in the first half, before going on to underline the task ahead as West Brom aim to retain their top-flight status.
"I'm extremely angry," he said. "The first half we gifted it to Crystal Palace. Now we have 13 very important games to ensure West Brom are in the Premier League.
"The first thing is to try to win the game on Tuesday [against Chelsea] and if we want to remain in this league then we must play like we did in the second half against Liverpool and the second half today.
"We have 13 cup finals and 13 battles and we must win as many as we can and the players must come with me on this battle."