Jurgen Klopp was left to rue an opening 15 minutes that "killed our confidence" and conceding "completely unnecessary goals" after Manchester City knocked Liverpool out of the Carabao Cup.
City beat the holders 3-2 in a thrilling tie at the Etihad Stadium on Thursday to secure their place in the quarter-finals.
Erling Haaland put the Premier League champions in front by volleying in Kevin De Bruyne's pinpoint cross.
But Fabio Carvalho equalised against the run of play 20 minutes into both sides' first game after the World Cup break.
A sublime touch and finish from Riyad Mahrez restored City's lead right at the start of the second half, only for Mohamed Salah brought the Reds level again just 80 seconds later.
City were the better side, though, and Nathan Ake headed in a terrific cross from the outstanding De Bruyne to win it just before the hour mark.
Liverpool manager Klopp told Sky Sports: "We played a formation that we haven't played for a long time, and we had to change in pretty much our last [training] session. You could see that, we needed time to adapt.
"In the first 15 minutes we had real problems and that killed our confidence and conviction a little bit."
Klopp was frustrated that De Bruyne was allowed too much time to whip in the cross for Haaland to open the scoring and switched off again to give the Belgium playmaker the chance to set up Ake following a short corner.
He added: "The goals we conceded were completely unnecessary. We had to be more switched on, especially for the third goal. Also the first goal, we should deny the cross.
"There are a lot of things we can build on and that's what we will do. It's a result we have to live with now."
James Milner was withdrawn in the first half due to a hamstring injury but Klopp revealed he is hopeful he has not done any significant damage.
Trent Alexander-Arnold played no part due to a virus, while Virgil van Dijk is set to return to the squad for the Boxing Day fixture at Aston Villa after featuring for the Netherlands in the World Cup.
