Brighton condemned Liverpool to their second straight Premier League home defeat on Wednesday, winning 1-0 to leave the champions with a mountain to climb if they are going to retain their title.
Jurgen Klopp's men appeared to have turned the corner with impressive victories at Tottenham and West Ham after a five-match winless run.
But defeat to lowly Brighton at Anfield leaves them in fourth place, seven points behind leaders Manchester City, who also have a game in hand and look increasingly likely to win their third title in four years.
Liverpool's 68-game unbeaten home run in the Premier League was ended by Burnley last month and they have now lost consecutive league games at Anfield for the first time since 2012.
Troublingly for Klopp, his side have failed to score in three consecutive home league games for the first time since 1984.
Graham Potter's men executed their game plan to perfection, snuffing out Liverpool's dangermen and offering a threat up front.
The only goal of the game came in the 56th minute courtesy of a Steven Alzate strike.
Klopp, who must prepare his team for the daunting task of facing Pep Guardiola's Manchester City on Sunday, said his team were not mentally fresh.
"The only explanation now is that we are a fatigued team, mentally more or less," he told BT Sport. "That leads to not the maximum freshness in your legs.
"We had our moments but they deserved to win."
He added: "The only thing we can do is use the things that happen and learn from them. The solution is always the players. It has been a tough week and tonight it was not enough. City are flying and we have to find solutions."
- Defensive crisis -
Liverpool captain Jordan Henderson was again drafted into central defence in the absence of any of the club's senior centre-backs, with new signing Ben Davies on the substitutes' bench.
Goalkeeper Alisson Becker was absent due to illness, meaning Caoimhin Kelleher made only his second Premier League appearance, and forward Sadio Mane was also missing.
Liverpool enjoyed the bulk of possession in the early stages but in-form Brighton were organised at the back and pushed forward when they could.
Mohamed Salah had a golden chance to give Liverpool the lead in the opening minutes when he collected a long ball from Henderson but put his shot over the bar.
Salah offered an occasional threat down the right but Liverpool looked short of ideas in the final third when faced with the massed blue shirts of Brighton.
The in-form visitors had a chance to take the lead midway through the first half when the ball fell to Dan Burn after Neal Maupay's shot was blocked but he skied over from close range.
Klopp's men went in at half-time having failed to muster a single shot on goal.
The second half shaped up like the first, with Liverpool probing but looking short of inspiration.
Instead it was Brighton who took the lead with the game's first shot on target.
Burn, on the left side of the Liverpool area, headed a cross-field ball back across goal and Alzate combined with Leandro Trossard to steer the ball into the net.
Klopp threw on Alex Oxlade-Chamberlain and Divock Origi for Georginio Wijnaldum and Xherdan Shaqiri as he sought a way back into the match.
Salah flashed a left-footed shot over after Trent Alexander-Arnold fizzed a ball across the area and Adam Webster produced a superb, muscular challenge to stop the Egypt forward in his tracks.
But Brighton were still threatening at the other end. Kelleher saved smartly from Pascal Gross and Trossard also forced a save.
The result lifts Brighton to 15th in the table, 10 points clear of the relegation zone.
"It's not an easy place to get points," said Potter. "They're a top team. We're just trying our best in this league.
"Every game we face a huge task. It's one for the supporters and everyone involved in the club. It's not often a club like us come here and win."