Peter Crouch's late goal completed a remarkable turnabout in the fortunes of Spurs who were battling relegation from the Premier League when Harry Redknapp became manager 18 months ago.
But while Spurs were jubilant, City were left crest-fallen as they must wait for another season at least before they can mix it with Europe's elite as they found that all the money in the world cannot buy success.
Spurs also maintained their remarkable hold over City as this was their 12th victory in their last 13 meetings.
Carlos Tevez made a couple of dangerous early breaks for City, forcing keeper Heurelho Gomes into one decent save.
But it was Spurs that were left cursing their luck after twice going close in quick succession to taking the lead.
Crouch headed against the upright and then Ledley King had a header ruled out for a foul, though replays suggested it was a fair leap.
Spurs were then indebted to Gomes who made two super saves to each time turn away shots from Adam Johnson while at the opposite end Gareth Bale fired narrowly wide after a Crouch knockdown.
The start to the second half was equally frenetic and City were rescued by on-loan keeper Marton Fulop who pulled off a fabulous save low to his left to keep out Jermain Defoe's goalbound shot.
Crouch had another great chance to make the vital breakthrough in the 77th minutes when Fulop somehow managed to keep out his close-range header.
It was somehow inevitable that Crouch, Spurs' most dangerous player, should have the last word as he came up with the all-important goal in the 82nd minute.
Right-back Younes Kaboul made a barn-storming run down the right and fired over a low cross which Fulop could only parry into the air to present Crouch with a relatively easy header into the roof of the net from six yards.