The Reds extended their lead at the top of the Premier League to eight points following a 3-1 victory over City, who stay fourth.
Liverpool took the lead in the sixth minute when Fabinho fired past Claudio Bravo, in for the injured Ederson, from 25 yards.
However, the goal was controversially given despite a VAR check revealing Trent Alexander Arnold appeared to handle the ball in his area seconds before.
The Reds second was also subject to VAR talk after the match. Mohammed Salah appeared to be slightly offside when he headed in at the far post from an Andy Robertson cross in the 13th minute.
This was only too prominent following Sheffield United’s disallowed goal against Tottenham on Saturday, for what looked like a toe-end being off side.
The Cityzens dominated throughout but surprisingly couldn’t find their finishing touch.
Sergio Aguero and Raheem Sterling both missed chances as City tried to find a way back into the match.
But six minutes into the second half it seemed all but over when Sadio Mane headed in a Jordan Henderson cross, which left Bravo in two minds in the Blues’ goal.
Bernado Silva pulled one back with 12 minutes left, but it was too little too late for City, who will be disappointed that they didn’t make more of their possession and chances they had during the game.
Man City boss Pep Guardiola appeared to sarcastically thank match official Michael Oliver and his assistants at the end of the game before leaving the pitch, after being outraged following another penalty not being given for handball late on.
City defensive issues
Although City dominated the game and the scoreline flattered Liverpool, City’s defensive problems were clear to see.
Stand-in goalkeeper Claudio Bravo doesn’t give off the best assurances that first choice Ederson does.
Although he wasn’t at fault for all the goals, he certainly was for the third when he hesitated on Henderson’s cross which led to Mane scoring.
Injuries to key players may cost City dearly in the title race, with Aymeric Laporte out for a considerable amount of the season.
And not addressing the depth of defensive cover in the summer have added to their woes this season, having to rely on makeshift centre backs in Fernandinho and Rodri.
You can’t write anything off with this Manchester City side and they have a chance to address these issues in the January transfer window, but this Liverpool side look unbeatable at present.
Guardiola was left frustrated by many of the decisions during the title clash, something he made clear on the touchline to fourth official Mike Dean.
He even appeared to sarcastically thank the match officials at the end of the match, something he refused to comment on in his post-match press conference. He will not face any punishment from the FA for his actions.
However, he did say “No, I always thank the officials, it wasn’t sarcastic”, when asked if he meant what he said.
The City boss was quick to say how proud he was of his team despite defeat and that they showed why they are champions with their performance.
You can be sure that Guardiola will keep his team fighting but it looks a long way back now following this damaging defeat.
Liverpool travel to Crystal Palace on Saturday, while Manchester City host Chelsea in the late kick off.