Hodgson proud of halting Manchester City's winning run
Palace had conceded 10 goals in their previous two meetings with City and came into the game as huge underdogs given the sensational run that Pep Guardiola's side have been on in the league.
City had not failed to score in the league since their goalless draw with Manchester United in April, but lacked the flair that has become their trademark.
Sergio Aguero, Bernardo Silva and Leroy Sane had City's best opportunities, but Palace remained resolute, Wayne Hennessey pulling off a great save to deny the German late on.
The point lifts Palace out of the bottom three at West Ham's expense, and Hodgson was delighted with his side's display.
"At a moment like this it's better to focus on how well we played and give the players an enormous pat on the back," he told a media conference.
"I'm very pleased and proud of the performance.
"I thought it was excellent in terms of their commitment, focus and determination. You only need to fall asleep for a brief moment against this team and they will punish you."
0 - Crystal Palace are the first home team to stop Manchester City scoring in the Premier League since Everton back in January. Resolve.
— OptaJoe (@OptaJoe) December 31, 2017
Palace could have been celebrating a dramatic victory had Luka Milivojevic converted a stoppage-time penalty, but the midfielder fired straight at Ederson from 12 yards.
It is the second late penalty miss this month for Palace after Christian Benteke faltered against Bournemouth after taking the ball off Milivojevic.
Despite the disappointment Hodgson believes there are plenty of positives Palace can build on as they look to climb away from the bottom three.
He added to BT Sport: "It's a very pleasing performance and if you'd given us a point before the game we'd all be jumping through hoops.
"When you get a penalty late on and miss it as we've done once before, there's always an element of sadness or a chance missed.
"But I've told the players that if we produce that week after week, we've got a good chance of staying in the league."