City have struggled to finish their opponents off both this season and last, but Keegan feels the problem has become more serious over the last two home games - 1-1 draws with Norwich then Blackburn.
"Our inability to get a second goal cost us dear again on Saturday," the Blues boss told the official City website.
"At the moment our football is not as good as it should be. We were drawing games last year but we were playing better. We are drawing games now but not playing as well.
"We just didn't seem to be able to get a foothold into the game on Saturday and dominate it, and you expect to be able to do that at home.
"We are thin on the ground with players and that is not an excuse but a fact, and the problem is that we do not have a big enough squad at the moment to change things when they aren't going right.
Keegan added: "The players are working hard so their effort has to be applauded. But we seem to panic a little bit at 1-0 instead of using that as a platform to win a game.
"We seem to think it is not enough to win a game and that the opposition could get something out of the game."
Saturday's goalscorer Sibierski is equally concerned, saying: "We're losing too many points at home and we have to put that right.
"We should have beaten Norwich and Blackburn and we really should have four more points than we have. It is disappointing and it is tough on the confidence of everybody.
"We needed to win the game to get into the top 10 so it was a bad result again. We must lift ourselves to carry on the good work we are doing in training and make sure the results come."