Victory would have taken Liverpool level at the top but they were undone by Southampton's rousing second-half display and two self-inflicted wounds. A penalty clumsily conceded by Sami Hyypia and an own-goal by John Arne Riise with his first touch gave Gordon Strachan's side two goals in eight minutes and a deserved win.
Southampton are up to 12th in the table, their early-season struggles as distant a memory as the form which had Liverpool leading the Premiership last month. This display raises more questions about Liverpool's ability to deliver the first championship to Anfield since 1990, particularly without genuine width or the potency of Michael Owen.
Owen was absent with an ankle injury which should clear by the weekend and Liverpool created little. Nicolas Anelka worked hard but had only two bright moments - both in the first half when he forced a good save from Paul Jones - and Jari Litmanen's touches before the interval produced the only notable moments of skill in a workmanlike Liverpool performance.
If the first half was tight, the second was dominated by Southampton. Their discipline, energy and work-rate were impressive and they laced their game with moments of skill. Liverpool's midfield was second best after the interval and it was tempting to feel that Steven Gerrard would have been better employed in the centre than wide.
Phil Thompson admitted the display was "not what we were expecting" but was defiant rather than downcast. His team play Arsenal, Leeds and Manchester United in the next month and he does not subscribe to the argument that Liverpool are fading inexorably from the title race.
"You look at Manchester United," the stand-in manager said. "People were saying disrespectful things about them. We knew they were capable of putting a run together and that's what this team is capable of.
"The other teams know that and that's why we will be a danger. I honestly believe we will be up there in April coming to May. We are capable of going unbeaten for 10 or 12 games but the consistency is not there at the moment." Danny Murphy's form has dipped since the early part of the season and Vladimir Smicer has faded desperately after a bright start. The narrowness of Liverpool's approach hardly helps them.
If they are struggling for consistency, Strachan is finding it for Southampton. They have beaten Chelsea and Liverpool in successive matches; the struggles under Stuart Gray and the problems in winning at their new stadium have been impressively overcome.
Southampton have won four of their past five games here, losing the other to Leeds in the last minute. "We are very happy," said Strachan. "I know managers like to play things down but I'm very proud."
Wayne Bridge added weight to the feeling that he could be a future England left-back with a fine performance full of positive forward runs. Paul Williams again impressed at the back and Marian Pahars and James Beattie never allowed Liverpool to relax.
The visitors did edge the first half, with Litmanen prominent. Claus Lundekvam blocked well from Murphy and Litmanen had a shot deflected over before setting up Anelka for a shot which was excellently saved. Southampton did not force a serious save from Jerzy Dudek.
But in the second half they began to create openings, with Matt Oakley breaking effectively from midfield. Dudek saved well from Chris Marsden before Hyypia's wild challenge on Oakley conceded the penalty. Beattie converted.
Southampton's second was not long in coming: Pahars skipped down the left and delivered a cross which looped off Riise's head and beyond Dudek. It was lucky but deserved.
"The game just drifted away from us," Thompson reflected. "We didn't cause them enough problems or pass the ball properly and that's only two things."
Such problems will have to be overcome fast if the title is to be won.