Robbie Fowler's last-gasp equaliser against his former club salvaged a point for Manchester City although a victory remains elusive for Kevin Keegan's side.
Two minutes of stoppage time had elapsed when Robbie Fowler struck the goal which denied Liverpool a second festive victory in 48 hours.
While Liverpool now lie sixth in the Premiership, Man City, without a win in 11 league and cup matches, remain only three points clear of the relegation places.
Liverpool manager Gerard Houllier was philosophical after seeing two points snatched form his sides grasp in the dying seconds.
He said: " I have mixed emotions because we could have won, but if Man City had been more clinical in the first half, we could have lost.
"We weren't at the races in the first half and I could have taken anyone of my players off, But we played much better in the second half and had the better chances." Those sentiments were echoed by Keegan, who declared: "Gerard Houllier will, deep down, be happy with a point.
"He will be disappointed not to have won after his side's second-half performance, but I was disappointed it was not all over by half time." City took the lead on the half-hour through a Nicolas Anelka penalty, after John Arne Riise held back Fowler.
Keegan also pointed to another blatant penalty his side ought to have been awarded when Igor Biscan clearly handled in the area, as well as to a brilliant first-half save by Jerzy Dudek who denied Anelka a certain goal.
Liverpool, completely outplayed in the opening half, came alive after the restart.
And it was no surprise when they drew level midway through the half through a close-range header from Vladimir Smicer, which trickled passed home goalkeeper David Seaman.
Harry Kewell struck the City upright before Liverpool took the lead ten minutes from the end through a spectacular 20-yard drive from Dietmar Hamann.
Substitute El Hadji Diouf ought to have sealed a victory for Liverpool, before Fowler saved a point, with the first goal he has scored against his former club.
Dudek parried Anelka's fiercely struck shot, substitute Trevor Sinclair fired in a follow up shot and Fowler was lurking inside the six-yard box to score.