The Reds hold a slender one-point lead at the top of the Premier League table with 10 games to go.
Defending champions City are their closest challengers, with Tottenham having suffered back-to-back defeats to slip off the pace.
Liverpool have faced accusations of showing nerves as they seek to bring an end to a wait for domestic dominance which has stretched to almost three decades.
Former Reds midfielder Ince is, however, of the opinion that it is those at the Etihad Stadium who are starting to feel the pressure – with Jurgen Klopp’s side having prevailed 5-0 over Watford in midweek while Pep Guardiola’s required a Sergio Aguero penalty to edge out West Ham.
“You can sense the panic at City, and the West Ham result proved it,” Ince told Paddy Power.
“It wasn’t convincing at all, and with five minutes to go Kevin De Bruyne was running the ball into the corner flag. It’s not often you see a City team do that, and that shows to me that they’re panicking, you can see they’re feeling the pressure.
“It’s not even about the performance at this stage of the season. It’s all about just getting the three points whatever happens.”
With City feeling the pace in an ongoing bid for an historic quadruple, Ince believes Liverpool can take the Premier League crown and make themselves living legends on the red half of Merseyside.
He added, with a derby date with Everton next up for Klopp’s team: “I still believe Liverpool will win the league, although there are still going to be twists and turns.
“This is what Sir Alex used to call ‘squeaky bum time’. Liverpool are experiencing squeaky bum time right now, this is where the pressure, emotions, sacrifice and mentality all come into play. Any slip ups can be the end of your title run.
“Because it’s Liverpool, and they’re going for the title, of course people are going to criticise them and are desperate to see them lose.
“But it’s how you react to that and how you come out of it, you need to answer those critics.
“I’m at the stage where I’m nervous for Liverpool, now. It’s been 29 years and they deserve to win it. My advice would be to be excited. Be excited about going head-to-head with Man City, be excited about the happiness that you could bring to the city.
“You need top performances every week, and as a player you should start thinking and getting excited about making history. I did, when I was playing for Man United and the team won the first title in 26 years, and that’s what keeps you going.
“This is the time when those Liverpool players can put themselves in the history books. They can be legends forever, you have to desire and want that.
“Now’s the time to think I’ll run through brick walls to get this win, I’ll pick up mistakes from my teammates, and I’ll do anything in my power to win the title.”