PERTH, October 18, 2013 (AFP) - Hedblom, who shared in a four-way lead after the opening 18 holes, fired three-under 69 to claim the outright lead at seven-under 137.
The Swede was two shots clear of Englishman Ross Fisher, who carded the lowest round of the day shooting five-under 67.
While England's Paul Casey missed the cut, Hedblom was dreaming of a fairytale win in the $2 million Perth tournament at Lake Karrinyup.
Casey, a 12-time winner on the European Tour, missed the cut by one stroke after finishing his second round at three-over.
The next two days will be make-or-break for Hedblom, who needs to win the tournament to retain his European Tour card for next year.
"I don't really have anything to lose. If I want to play another full year on Tour, I need to win," Hedblom said.
"So I just have to go for it and have fun. I think I'm better when I'm up in the lead rather than trying to shoot a low score to try to get into the lead."
Denmark's Soren Hansen (71-69) was among five players at four-under 140, while world number 21 Dustin Johnson of the United States was six shots off the pace after a two-over 74.
American defending champion Bo van Pelt was at three-under for the tournament.
Fisher's highlight of the round was a 20-metre chip-in from the bunker on the par-3 eighth.
"It was a decent lie but it was coming down the green and downhill, so I knew it was going to be pretty quick," Fisher said.
"I'm still getting used to the greens. Obviously, they are a lot quicker than what myself and all the Europeans are used to."
A member of the European Ryder Cup team in 2010, Fisher has had a top-10 finish on the PGA Tour and another four on the European Tour this year.
Leading scores after the second round of the $2 million EPGA-sanctioned Perth International at Lake Karrinyup (par-72) in Perth on Friday (Australia unless stated):
137 - Peter Hedblom (SWE) 68-69
139 - Ross Fisher (ENG) 72-67
140 - Soren Hansen (DEN) 71-69, Clint Rice 68-72, Josh Younger 70-70, Jin Jeong (KOR) 68-72, Dimitrios Papadatos 69-71
141 - Brody Ninyette 72-69, James Nitties 68-73, Bo Van Pelt (USA) 70-71, Richard Finch (ENG) 72-69
142 - Marcus Fraser 72-70, Fredrik Andersson Hed (SWE) 69-73, Jason Scrivener 75-67, Michael Hoey (NIR) 73-69, Ryan Haller 72-70, Nick O'Hern 69-73, Mark Brown (NZL) 70-72, Nick Cullen 69-73, Christopher Campbell 71-71
143 - Ross McGowan (ENG) 71-72, Paul Spargo 72-71, Peter Lawrie (IRL) 73-70, Alexandre Kaleka (FRA) 74-69, David McKenzie 75-68, Gareth Paddison (NZL) 74-69, Fabrizio Zanotti (PAR) 75-68, Dustin Johnson (USA) 69-74, Danny Willett (ENG) 72-71, Peter Wilson 72-71, JB Hansen (DEN) 70-73
Selected scores:
144 - Soren Kjeldsen (DEN) 76-68, Oliver Fisher (ENG) 72-72, Espen Kofstad (NOR) 71-73, Joel Sjoholm (SWE) 71-73, Mikko Korhonen (FIN) 73-71, Sam Little (ENG) 69-75, Craig Lee (SCO) 73-71
145 - Chris Doak (SCO) 72-73, David Higgins (IRL) 73-72, Justin Walters (RSA) 76-69, James Morrison (ENG) 73-72
146 - Branden Grace (RSA) 73-73, Gregory Havret (FRA) 73-73, Scott Henry (SCO) 74-72, Mark Tullo (CHI) 75-71, Richard Bland (ENG) 75-71, Richard McEvoy (ENG) 76-70, David Drysdale (SCO) 72-74, Simon Wakefield (ENG) 72-74, Bjorn Akesson (SWE) 69-77
Missed cut:
147 - Paul Casey (ENG) 76-71, James Kingston (RSA) 74-73, Alexander Levy (FRA) 74-73, Thomas Petersson (SWE) 70-77, Jose Manuel Lara (ESP) 73-74, Robert Coles (ENG) 70-77
148 - Tjaart Van Der Walt (RSA) 75-73, Gary Lockerbie (ENG) 74-74, Lasse Jensen (DEN) 77-71, Michael Jonzon (SWE) 73-75
149 - Brandon Stone (RSA) 77-72, Rikard Karlberg (SWE) 76-73, Anthony Snobeck (FRA) 73-76
150 - Chris Paisley (ENG) 77-73, Johan Edfors (SWE) 73-77, Oscar Floren (SWE) 75-75
152 - Andreas Harto (DEN) 77-75
153 - Matthew Nixon (ENG) 79-74
154 - Peter Erofejeff (FIN) 75-79
155 - Lorenzo Gagli (ITA) 78-77
156 - Joakim Lagergren (SWE) 81-75
158 - Matteo Delpodio (ITA) 78-80
160 - Dawie Van Der Walt (RSA) 78-82