Despite senior international Martin Odeggard firing Norway into a 19th-minute lead, Jake Mulraney marked his first competitive start at this level with a brilliant equaliser 13 minutes later.
The Inverness forward showed a clean pair of heels to skip past Ulrik Jenssen and tuck a shot beneath Per Bratveit in the Norway goal.
Ireland goalkeeper Kieran O’Hara made a string of saves in the second half to keep the dominant hosts at bay.
Odeggard, the Real Madrid teenager currently on loan at Dutch outfit Heerenveen, saw his free-kick on the hour mark stopped by the Manchester United custodian.
However, just as Ireland looked to holding out a draw which would have kept Norway five points adrift, Fossum struck from the edge of the box in stoppage-time when Noel King’s side failed to clear a corner.
Germany’s 5-2 win away to Israel means Ireland relinquish top spot for the first time yet they remain well in contention to claim a play-off spot — and a possible play-off for a first-ever finals appearance — during the second half of the series next year.
“The boys are rightly very disappointed to lose to a late goal because they deserved a draw,” said King.
“To respond from going a goal down in sub-zero conditions on an artificial pitch shows the character of these players. They had defended so well in the second half and got caught right at the end. All we’re thinking of now is playing Azerbaijan at home in March. This is a setback but we’re well in this campaign.”
P Bratveit; A Hanche-Olsen, K Ajer, U Jenssen; J Ryerson, E Rieten (D Torset-Johnsen 70), I Fossum; B Risa (M Ingebrigsten 85), M Thorsby, M Odegaard; H Bjordal (R Espejord 73).
K O’Hara (Manchester United); C Whelan (Liverpool), R Sweeney (Bristol Rovers), S Donnellan (Walsall), D Kane (Huddersfield Town); D Rice (West Ham), J Cullen (Bolton Wanderers); H Charsley (Everton), J Mulraney (Inverness), R Curtis (Derry City); R Manning (QPR).
C Ronan (Wolves) for Manning (68 mins)
V Nevalainen (FIN).