The Reds were 1-0 down after only 50 seconds when a mistake by Zak Whitbread let in Nazi Kuqi to score past Academy goalkeeper Paul Willis. Birmingham added their second goal in the 90th minute.
Liverpool had chances to equalise before Birmingham scored their second; Ramon Castille and David Mannix having the Reds' best chances.
There were a couple of plus points for the Reds on the night. Hull winger Paul Anderson, who will officially join Liverpool in January but is currently on a work experience deal, had a good game. Antonio Barragan made his comeback from injury on Tuesday and played the full 90 minutes on the right side of midfield.
