Jerzy Dudek started in goal for the Reds with Emiliano Insua making his first team debut at left-back. Gabriel Paletta partnered Sami Hyypia in defence while Craig Bellamy and Robbie Fowler led the line up front.
Liverpool had the ball in the back of the net after eleven minutes but Robbie Fowler's 'goal' was ruled out for offside. Portsmouth were playing the better football though and they took the lead after 27 minutes when Dudek came to collect a David James hoof but missed the ball and allowed Benjani Mwaruwari a free header.
It was 2-0 four minutes later when Niko Kranjcar slotted past Dudek from 12 yards out after a through ball from Lauren split the Reds defence.
Bolo Zenden almost reduced the defecit on the stroke of half time when he connected sweetly to send a powerful volley goalwards but unfortunately it cannoned off the crossbar with David James beaten.
Liverpool did improve in the second half and pulled a goal back just before the hour mark when Sami Hyypia headed home a Robbie Fowler corner. The Reds pushed for an equaliser but couldn't find one.