The Finn won the seventh 21km Felizes-2 stage in southern Portugal, his third stage victory of the event, by a 6.4 second margin to lead his team mate and championship leader Mikko Hirvonen by 11.5 seconds.
Citroen's seven times world champion Sebastien Loeb was lurking in third place, 13.7 off the pace, and fellow-Frenchman and team mate Sebastien Ogier fourth and 16.7 seconds behind the leader.
Loeb and Ogier, who had led Latvala by 1.8 seconds going into the day's last stage in the Algarve, both slowed to make sure the Fords would be on the road and acting as gravel 'sweepers' before them on Saturday morning.
"Nobody knows exactly what will happen tomorrow," Ogier told the wrc.com website. "You need to have a big gap to stay in the lead but it was not possible to take that today because conditions were similar for everybody." Latvala was well aware of the strategy.
"It might not be the ideal position to be, but it is what it is and I'm not afraid of what's happening," he said. "It would have been maybe the best time to slow down, but this time it went like this." Norway's Petter Solberg suffered his third puncture of the afternoon and, with no spare available to get his Citroen back to service in Faro, retired from the leg. He will re-start on Saturday with a 10 second penalty.
Finland's Hirvonen leads the championship with 46 points to Loeb's 37 after two of the 13 rounds. Latvala is third on 31.
