Swedish referee Krister Gardell excluded the Belle Vue star from heat 13 when he tumbled off on the first bend.
Crump claimed that Denmark's Hans Andersen had hit him but his appeal to the official fell on deaf ears and he said: "It was another bad refereeing decision in a Grand Prix."
He recovered to produce a stunning ride in the final after being left with the unproductive outside starting gate, cutting inside to pass Pedersen going into the back straight of the first lap.
It was his second GP triumph of the series as he won the British title at Cardiff in June.
Even so, Crump reduced Pedersen's overall lead in the championship by just one point and the Dane is a hot favourite for the World title as he leads by 16 points overall with just three meetings to go. The next meeting is the Polish GP in Bydogoczsz on September 13.
Latvian GP: J Crump (Aus) 19, N Pedersen (Den) 18, T Gollob (Pol) 16, G Hancock (USA) 13, A Jonsson (Swe) 10, C Harris (GB) 9, L Adams (Aus) 9, B Pedersen (Den) 7, H Andersen (Den) 7, F Lindgren (Swe) 7, S Nicholls (GB) 7, K Kasprzak (Pol) 7, L Dryml (Cze) 7, R Holta (Pol) 4, G Laguta (Rus) 2, N-KIversen (Den) 1. Overall standing after 8 of 11 rounds: Pedersen 134, Crump 118, Hancock 102, Gollob 98, Andersen 91, Adams 89, Jonsson 71.
Crump and Andersen meet again tonight when the One51 Aces tackle lowly Coventry at Kirkmanshulme Lane (7.45) in a match with a strong bearing on the relegation play-offs.
Victory for the Aces would mean Coventry would have to pick up away points in their remaining matches to overtake them.
The Aces have three matches remaining, two at home, with 24 points from 29 matches. Coventry have 21 from 26 with Wolverhampton on 16 from 25 and Peterborough 16 from 24. Coventry have two homes matches to ride, Wolves one and Peterborough seven.
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