Balotelli has endured a poor first season at Anfield, but came off the bench to net seven minutes from time in a pulsating clash between two of the division's top-four hopefuls.
The hosts had twice taken the lead through Lazar Markovic and a Steven Gerrard penalty, only to be pegged back on each occasion by goals from Harry Kane and Moussa Dembele.
But Balotelli popped up to move Liverpool within a point of sixth-placed Tottenham in the race for UEFA Champions League football, and Pascoe felt the Italian's strike was just reward for his efforts.
"Mario Balotelli has been working hard in training and for the last couple of weeks he's been ill so it's great that he scored the winner," Pascoe told BT Sport.
"It was important to win tonight, it was a great win and we deserved it."
Pascoe - fulfilling Liverpool's media commitments after manager Brendan Rodgers left the stadium to catch a plane - also revealed that captain Gerrard had been withdrawn in the 68th minute due to injury.
"Steven Gerrard felt his hamstring and felt he had to come off," he added.
