Roberto Mancini's team lost ground in the title race following thunderbolt strikes from Steven Gerrard and Daniel Sturridge.
Two thunderbolt strikes in either half from Daniel Sturridge and Steven Gerrard cancelled out Edin Dzeko’s 23rd minute opener. But Sergio Aguero took advantage of a Pepe Reina mistake with 12 minutes left to score a brilliant equalizer from an almost impossibly tight angle.
They were three finishes that would grace any fixture, and this pulsating encounter was yet another great advert for the drama and entertainment of the Premier League.
It leaves Roberto Mancini’s team, out-played for much of the game, nine points behind pace-setter Manchester United after letting four points slip in five days.
Liverpool, which became the first team to score against City this year when Sturridge rifled in the equalizer, was unfortunate that its commanding display did not bring the reward of a first league victory of the season against a team in the top half of the table.
Brendan Rodgers team only has two points to show for highly commendable draws at Arsenal and City this week and has slipped nine points behind fourth-placed Tottenham, but progress is clearly being made at Anfield.
Mancini had reacted to City shedding two points at QPR by recalling Dzeko and Matija Nastasic to the starting XI in place of Carlos Tevez and Samir Nasri.
Rodgers made one change from midweek, with fit-again Jose Enrique replacing Andre Wisdom, which allowed Glen Johnson to shift across to right back.
Liverpool controlled the opening quarter of the match and tried to take advantage of the absence of twin totems Vincent Kompany and Yaya Toure.
Only a wonderful block from Pablo Zabaleta stopped Sturridge giving the visiting side the lead in the 14th minute following a Joe Hart misjudgement, while Suarez was unable to take advantage of two clear sights of goal.
Against the run of play, City took the lead in the 23rd minute with a beautifully-worked counterattack. The home side worked some space on the left flank, James Milner drove the ball into the box and Dzeko tapped in his 11th league goal of the season.
There was an element of controversy to the equalizer five minutes later even though Sturridge’s strike against his old club was as cleanly struck as you will ever see.
City was furious that referee Anthony Taylor had not stopped the play when Dzeko fell down in a heap in the Liverpool half at the start of the move, but the complaint lacked legitimacy on two counts.
Teams are only required to put the ball out of play if it is a head injury and, as soon as Sturridge’s shot rested in the net, Dzeko seemed to forget about his injury and jumped to his feet to vociferously complain, for which he was subsequently booked.
Moreover, the goal was well deserved. It was the first City had conceded since the third of Norwich’s strikes in the seven-goal thriller at Carrow Road on Dec. 29.
Liverpool’s dominance continued after the break. Rodgers’ team was quicker to the ball, moved it around purposefully and continually put City’s vulnerable defense on the back foot.
Going a goal ahead in the 73rd minute was the least the Merseysiders deserved. Receiving the ball in a central area around 30 yards from goal, Gerrard controlled it with his chest and arrowed a magnificent strike low to Hart’s right.
It was vintage Gerrard and reward for an outstanding display by the skipper, who had also set up the opening goal.
Yet the Englishman’s technique and impudence was soon swiftly matched by Aguero. After Reina had rushed out of his goal to try and shepherd the Argentine away from danger, the striker took possession and finished from a near-impossible angle close to the line.
City finished the stronger of the two sides but Liverpool managed to hold on to claim its second 2-2 result of the week.