Manchester - Manchester City manager Pep Guardiola was gushing in his praise for Kevin De Bruyne after the Belgian led a dominant display from the Premier League champions to close to within one point of second-placed Leicester with a 3-1 win at the Etihad.
Brendan Rodgers's men arrived in Manchester on an 11-match unbeaten run, but were outclassed throughout despite taking the lead through Jamie Vardy.
Riyad Mahrez quickly brought City level against his former club before Ilkay Gundogan's penalty and Gabriel Jesus's tap in from De Bruyne's cross helped City cut the gap on league leaders Liverpool to 11 points.
"If we play like we did tonight we can compete with everyone," said Guardiola.
"Kevin De Bruyne was incredible tonight - he won the game for us.
"He has always been incredible since we've been together. His commitment is incredible. He's a spectacular player."
Liverpool are not in domestic action this weekend as they won the Club World Cup in Qatar, but will be happy to return home with their 10-point lead over Leicester intact ahead of their trip to the King Power on Boxing Day.
On this evidence, City remain Liverpool's biggest threat to a first league title in 30 years despite the indifferent form of Guardiola's men so far this season.
"The result shows how well my players have done to be where they are," said Rodgers.
"It was a real good lesson for us tonight. Their quality, intensity, we certainly have no complaints about the result.
"Second half we were more like ourselves but it still showed with this young group there is a long way for them to go."
The hosts started brightly as the outstanding De Bruyne struck the post and Kasper Schmeichel made the first of a string of fine saves to deny Jesus after a brilliant jinking run and cut-back from Mahrez.
"You see De Bruyne tonight and the level he is at, it's a world class level," added Rodgers.
"To be ahead of Man City at this stage of the season shows you how well we've done."
City had been carved open routinely in losing their last home game to Manchester United, but did not learn their lesson as Vardy posed a constant threat on the counter-attack.
Vardy extended his lead as the Premier League's top scorer as he raced onto Harvey Barnes's excellent through ball before dinking over the advancing Ederson for his 17th of the season on 22 minutes.
But it was still City who were creating the majority of the chances and they finally got their reward eight minutes later.
Mahrez was a persistent thorn in the side of his old club, but needed a stroke of luck to get City level as his shot struck Caglar Soyuncu and wrong-footed Schmeichel.
The Danish goalkeeper was at his best moments later to save De Bruyne's powerful drive.
But the City pressure paid off just before the break when Ricardo Pereira was penalised for tripping Raheem Sterling inside the area despite replays showing there was minimal contact between the two.
Schmeichel's heroics in a penalty shootout against Everton helped Leicester book their place in the League Cup semi-finals in midweek, but Gundogan's spot-kick had too much power as the German found the bottom corner.
Only more Schmeichel saves kept Leicester in the contest with a strong right hand to beat away another Mahrez effort the pick of the bunch.
City's dominance was finally rewarded with the two-goal cushion they craved 21 minutes from time when De Bruyne burst down the right and his low cross was perfectly measured for Jesus to tap home his first goal at the Etihad since January.