An electric opening saw the Reds race into a two-goal lead inside the first 13 minutes.
First, Fabinho powered in from 20 yards when he pounced on a loose clearance before Mohamed Salah glanced in a header from an Andy Robertson delivery soon after.
Sadio Mane furthered the European champions’ lead just after half-time when he stooped to nod in a Jordan Henderson centre at the back post.
Bernardo Silva reduced the deficit on 78 minutes, steering in at Alisson Becker’s near post to set up a tense finish, but Liverpool held on to go eight clear at the summit – and nine in front of the reigning title-holders.
Team news…
Liverpool’s teamsheet showed five changes from the starting line-up deployed against Genk in midweek.
Dejan Lovren and Robertson returned in defence, while Henderson was restored in midfield. In attack, Roberto Firmino and Mane re-joined Salah.
First half…
With the high stakes on offer, Anfield’s decibel rating was cranked up to greet kick-off.
City attempted to quell the noise by forcing the early play, with a series of set-pieces testing Liverpool’s early concentration levels.
But, with six minutes on the clock, the noise went up a further few notches as Fabinho fired the Reds into the lead. Pouncing on Rodri’s attempted clearance, the Brazilian took a touch to set himself before drilling beyond Claudio Bravo from 20 yards.
Shortly after, a good start became a remarkable one as Salah doubled the advantage. A sweeping counter resulted in Robertson swinging a centre towards the back post from deep, where the No.11 judged the bounce of the ball and nodded it back across goal and into the far corner.
City threatened to reduce the arrears midway through the opening period with Sergio Aguero shifting into space inside the box; however, his subsequent effort was beaten away by Alisson.
Pep Guardiola’s side went closer still just before the half-hour mark when Angelino’s prod goalwards deflected off Robertson and clipped the base of the post.
At the other end, Lovren glanced wide from a Robertson corner and Firmino scooped well over after side-stepping Angelino’s attempted challenge.
The hosts’ No.9 had another strike parried by Bravo following a charge from deep by Trent Alexander-Arnold to create the opening.
Aguero then zipped one narrowly wide of Alisson’s far post after being played into space by Kevin De Bruyne’s pass, while City needed acrobatics from Bravo to thwart a Salah swipe towards the top corner on the stroke of half-time.
Second half…
Liverpool resumed the second period at Anfield knowing the next goal could prove crucial to determining the outcome of the contest.
And it was to be the Reds who’d get it when Henderson hoisted a cross towards the back post, where Mane arrived to stoop and nod in over the line six minutes after the restart, sending the Kop into delirium.
City fashioned an opportunity to pull one back through Raheem Sterling, but he was denied by a stunning block by Lovren after the England forward had created the shooting chance inside the box.
They did get on the scoresheet with 12 minutes remaining when Bernardo Silva drilled in at the near post to set up a tense finale.
And Liverpool were afforded a let-off when Sterling squared across the six-yard box, but fortunately couldn’t pick out a teammate.
Kyle Walker headed an Angelino cross over as the game ticked towards its conclusion, but the Reds held onto their advantage to strengthen their grip at the Premier League summit to eight points.