The 27-year-old German is competing against Brazilian Antonio Pizzonia for the team's second race seat alongside Australian Mark Webber.
Heidfeld, who impressed the BMW-powered team so much in initial tests late last year that they delayed a decision on their second driver until this month, completed 81 laps at Jerez with a best time of one minute 17.447 seconds.
Webber was second quickest in 1:17.493 in ideal conditions.
BAR, who launch their new car in Barcelona on Sunday, were the only other team at the track in the first session of the year with Briton Anthony Davidson and Brazilian Enrique Bernoldi.
Up to three head-to-head test sessions between Pizzonia and Heidfeld are scheduled for Jerez to help the team make a decision before they launch their 2005 car at Valencia on January 31.
"Fighting for the second seat is the biggest chance I have ever had in my career," said Heidfeld, a former McLaren test driver who has raced for Prost, Sauber and Jordan.
"Whether at a test or in the factory, being with the BMW Williams team is a complete change to what I'm used to."
Pizzonia, the official test driver who raced for Jaguar in 2003 before being cast aside, was the favourite for the Williams drive until Heidfeld showed his pace.
"For sure, I want to race in 2005," said the Brazilian. "The evaluation at the tests is fine, tough competition is a natural part of Formula One.
"This month is going to be the most important of my career. If I don't get the second race seat, I will give the team my full support as a test driver, in order to help them win races again," added the 24-year-old.
Williams, nine times constructors champions and winners of 113 races but without a title since 1997, will have an all-new line-up this year after the departure of Germany's Ralf Schumacher and Colombian Juan Pablo Montoya.
