Javier Mascherano was sent off as Liverpool suffered a disastrous 2-0 defeat at Portsmouth.
Pompey's victory, with the goals coming from Nadir Belhadj and Frederic Piquionne, will ignite hope of survival in the Barclays Premier League.
However, Liverpool chances of finishing in the top four are uncertain - they missed a chance to record back-to-back league wins for the first time since September.
It means Avram Grant maintains his unbeaten record against Rafael Benitez after recording two wins and two draws during his time at Chelsea in the 2008 season.
Back then he ended the Spaniard's Champions League hopes at the semi-final stage - this time he has dented their chances of even qualifying for the competition.
Benitez was furious with Lee Mason, who sent two Liverpool players off during the defeat to Fulham earlier in the season, for his straight red for Mascherano, who will now miss four games through suspension.
The defeat also meant there was no celebration to mark Jamie Carragher's 600th appearance for Liverpool - until Belhadj's strike he would not have enjoyed an easier 30 minutes in his previous 599.
In truth, both sides needed time to find their a footing in a game played under tricky conditions. The match was able to go ahead due to the pitch being covered during the week, although there were traces of snow on the shaded areas of the turf meaning passing was sometimes hindered.
Benitez was boosted by the return of Fernando Torres after the Spain striker rested his troublesome groin in the midweek win over Wigan - but he was limited to half-chances.
Torres had a sight of goal early on but Hermann Hreidarsson was back in time - his sliced clearance could have gone anywhere but ended up in Asmir Begovic's hands.
Torres then got closer midway through the half after collecting a pass from Andrea Dossena and curling just over the bar, then he was inches from Steven Gerrard's cross.
Dossena's selection was a curious decision, especially with Yossi Benayoun relegated to the bench and Ryan Babel back after an ankle complaint.
And any plans Benitez had of his changes ensuring a simple victory were blown away just after the half-hour mark when Pompey took the lead.
Belhadj started the move himself by nutmegging Emiliano Insua to set up the attack. When the ball was cleared, Kevin-Prince Boateng forced Pepe Reina into a save with a powerful volley, former Pompey full-back Glen Johnson cleared the ball only as far as Belhadj and the Algerian lashed in at the near post.
Belhadj has been out of favour under Grant, this was his first game since October and resulted in his first goal of the campaign.
Daniel Agger should have levelled before the break. Gerrard's free-kick found him unmarked but the centre-back headed over from close range.
To make matters worse, then came Mascherano's dismissal.
The Argentina midfielder recklessly crashed into Tal Ben Haim, although his feet did not leave the ground. Nevertheless, Mason consulted the fourth official before giving a straight red card.
It was a decision that infuriated Benitez, who had chants of "you're getting sacked in the morning" aimed at him from home fans.
Benitez made his move eight minutes after the break, introducing Benayoun for Dossena to the delight of Liverpool fans, many of whom had set off at unsociable hours for the lunchtime kick-off.
Michael Brown made himself busy in midfield, winding up his opponents. When Torres snapped and fouled the Pompey skipper it earned the striker a yellow card, then the striker may have been fortunate to stay on the pitch when he led with his arm in a challenge on Ben Haim.
Johnson also earned a booking for tripping Jamie O'Hara when the on-loan Tottenham midfielder robbed him deep in Liverpool territory.
Begovic needed to be at his sharpest to deny Gerrard after the England midfielder's shot struck Brown and Hreidarsson. The Pompey goalkeeper was falling the wrong way but managed to palm the ball away.
Piquionne doubled the lead with eight minutes remaining, latching onto Boateng's cross, spinning around Carragher and finishing crisply.
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