It's now back-to-back defeats in the division for the Reds following the midweek home loss to Arsenal.
Scott Rogers went into the game still without the services of No.1 goalkeeper Siobhan Chamberlain but, with captain Gemma Bonner and Casey Stoney ruled out, Amy Turner was able to return as she partnered Sophie Ingle at centre-half.
The Reds got off to the worst possible start by conceding in the opening minute. A defensive lapse led to former Everton striker Nikita Parris nipping in to score.
City made it 2-0 early in the second half. Caroline Weir lunged in on Parris after a storming run into the box from the right flank, and the inevitable penalty was awarded.
Izzy Christiansen duly stepped up to smash the ball into the top corner of the net with 55 minutes played.
The hosts extended their lead on the hour mark, Parris rising unchallenged to meet a corner and send a header beyond the reach of Becky Flaherty.
Liverpool threatened on 66 minutes when a Laura Coombs free-kick found the head of Bethany England, but the No.11 couldn't hit the target as the ball sailed over the bar.
And the leaders soon made it 4-0. Abbie McManus drove into the penalty area and though her effort was blocked by Kate Longhurst, the ball deflected back off the City player and into the net.
Liverpool Ladies: Flaherty, Murray, Greenwood, Turner (Johnson, 65), Harris (Babajide, 65), Ingle, Longhurst (Roberts, 85), Coombs, Clarke, Weir, England.