David Ngog fired the Reds into an early lead before Christian Benitez and Cameron Jerome gave Birmingham a 2-1 advantage at the break.
 
Substitute Steven Gerrard levelled from the spot but Rafa Benitez will not be content with a point from a game his side dominated from start to finish.
 
Liverpool's bid to gain ground on the frontrunners was boosted by the return of injured trio Glen Johnson, Albert Riera and Martin Skrtel, while Steven Gerrard was back on the bench after a groin problem.
 
It wasn't all good news for Benitez though, with rookie striker Ngog having to deputise for injured top scorer Fernando Torres.
 
The French U21 international looked lively from the off, and was the first to test Joe Hart with a stab at goal on 10 minutes.
 
Seconds earlier Johnson had found Yossi Benayoun darting into the box. The Israeli's cross was just behind the onrushing Dirk Kuyt but it looked ominous for Birmingham.
 
It took just 13 minutes for the opener to arrive when Hart made a superb double save to thwart Ngog and Kuyt. The ball fell to Riera, who whipped it to the far post where this time Ngog wouldn't be denied with an impressive left-foot volley into the top corner.
 
It was almost 2-0 minutes later when Kuyt headed an Emiliano Insua cross over the Kop crossbar.
 
Alex McLeish moved to steady the ship by introducing Lee Carsley into his midfield, but still the Reds probed.
 
The return of Johnson was proving key for Liverpool, who looked like scoring every time the England man forayed down the right.
 
It was all the more difficult for the home crowd to swallow, then, when Birmingham levelled from a set piece on 26 minutes. The ball was directed to Roger Johnson at the far post, and when the No.14 headed back across goal Liverpool failed to deal with it, allowing Benitez to prod home from close range.
 
Javier Mascherano led the Red response, bringing the best out of Hart with a 20-yard blast. Next Skrtel volleyed high into the Kop.
 
But on the stroke of half-time the game was turned on its head. First Riera had to be replaced by Gerrard after an apparent recurrence of his hamstring injury. Anfield roared for the return of their inspirational captain, but within seconds of his introduction Birmingham were in front after Jerome held off Mascherano before launching an unstoppable effort over Pepe Reina from all of 35 yards.
 
Liverpool came out early for the second period, and they were equally impatient searching for an equaliser. Lucas struck too close to Hart moments after the re-start, while Kuyt skinned two defenders down the right before skewing his cross.
 
Gerrard was starting to make his presence felt and almost found himself through on goal after a lovely dink from Lucas. Birmingham, though, continued to defend stoutly.
 
They were nearly undone on 63 minutes when the brilliant Johnson left his man for dead before crossing to Gerrard, who headed against the post from six yards.
 
The leveler finally arrived on 71 minutes after Ngog danced past two men before buying a penalty from Carsley. Gerrard stepped up and 40,000 Liverpudlians breathed a collected sigh of relief as the ball rippled the Anfield Road net.
 
Benayoun almost clinched it with a right-foot volley from Kuyt's nod down but Hart was having a blinder.
 
The contest was now being played out entirely in Birmingham's half, but Benitez was handed another injury blow when Benayoun made way clutching his hamstring on 77 minutes.
 
On came Ryan Babel, and he would soon be joined by summer signing Alberto Aquilani for his league debut.
 
It was Gerrard, however, who now looked the man most likely, sending in a precise centre which Ngog volleyed wide. The skipper then tried to deceive Hart with a dipping effort which sailed narrowly over.
 
The winner never came and Birmingham remain the only side Benitez has never beaten in the Barclays Premier League.