The result means Pep Guardiola’s men retain our one-point lead over the Reds ahead of the final seven games, having been unable to find a winner in a captivating contest that lived up to its big game billing.
City made a flying start to a breathless encounter, opening the scoring in the sixth minute when Kevin De Bruyne capitalised on a quick free-kick to send a 20-yard effort past Alisson via a deflection off Joel Matip.
The Liverpool goalkeeper had already denied Raheem Sterling from point blank range, but, with the hosts very much in the ascendancy, the visitors levelled inside seven minutes.
City’s failure to clear a cross allowed Andy Robertson to clip a ball to the far post for Trent Alexander-Arnold, who guided it into the middle where Diogo Jota was waiting to squeeze a shot under Ederson.
Despite the set-back, the home side remained on the front foot.
De Bruyne hit the outside of the post with a shot on the turn before Gabriel Jesus arrived unmarked at the far post to lift Joao Cancelo’s superb cross over Alisson and in off the crossbar to give us a deserved lead eight minutes before the interval.
Liverpool had struggled to keep pace with City but came roaring out of the blocks after the break and stunned the hosts with an equaliser a minute into the second period.
Mohamed Salah was the architect, splitting our defence with a precise through ball that allowed Sadio Mane to fire emphatically past Ederson.
It galvanised Jurgen Klopp’s men and Salah was again the provider as Jota forced the Brazilian into a save with an outside of the boot effort from the edge of the area, but for all it the second half was a more even affair, it was City who looked more dangerous in the closing stages.
Knowing how valuable a victory could be, Guardiola sent on Jack Grealish and Riyad Mahrez for Sterling and Jesus in a bid to find a breakthrough and almost reaped his rewards in sensational fashion as the Algerian hit the woodwork with a curling 25-yard free-kick.
A golden opportunity presented itself to Mahrez again as City countered in the dying seconds, but the winger sent his shot over the bar, meaning both sides walked away with a point that maintains our advantage in the title race.
Top two serve up a classic
In games of this magnitude, it can be difficult for the action to live up the pre-match hype.
Both sides will have been desperate to avoid a defeat which would have handed the opponent a huge psychological boost, but that did little to limit the freedom with which they played and it made for an absorbing encounter.
City were magnificent in the opening 45 minutes, but will rue several missed opportunities.
Jesus' low cross presented Sterling with an excellent chance with the score goalless, only for the winger to shoot straight at Alisson, who then saved comfortably when the Brazilian forward unleashed form 18-yards.
City’s No.9 saw a penalty appeal waved away in a frantic first half, with referee Anthony Taylor unmoved when Jesus was sent tumbling after a collision with Virgil Van Dijk and the Liverpool goalkeeper.
With the Reds struggling to gain a foothold in the contest, the impressive Cancelo sent a low drive into the side netting and, whilst the visitors improved after the break, they were indebted to Van Dijk, who got his body in the way of a Jesus effort that evaded Alisson.
There were a couple of nervy moments.
Ederson’s hesitation at a clearance almost saw a back pass trickle over the line with Jota lurking, whilst Aymeric Laporte was forced into a last-ditch tackle to prevent the Portuguese forward from finishing off a counter-attack.
And, though it was City who had the better of the chances, the visitors were on top for a spell in the second half of a contest which reinforced the fine margins that exist between these two sides.
With no quarter given, it was another classic encounter between the Premier League’s top two.
City remain on top
Guardiola was adamant he would not set his side up to play for a draw, but the result he got is not one that will displease the Catalan.
On paper, this was City’s sternest test of the final quarter of the season and avoiding defeat gives us the crucial advantage of our fate remaining in our own hands.
Win our final seven games and we will be champions for the fourth time in five seasons. It’s a scenario the boss would have taken at the start of the campaign and he will draw plenty of positives from the quality of this performance.
Pep Guardiola: Incredible performance in fantastic game
"It was a fantastic game from both sides. I have the feeling we missed opportunities to beat them, a feeling that we leave them alive.
"Heads up. I said to the team after the game, how good they have done, how proud we are. I think it was a good game for fans around the world. I am so happy with how we played.
"Normally when you do many many good things, you can understand why the sadness would be there. I said forget about it. We were ourselves.
"We performed incredibly well. We could not win but it’s football. That can happen."
Man of the Match: Kevin De Bruyne
As he so often is, the Belgian was the driving force in the City midfield, delivering a performance in which ingenuity and industry married to wonderful effect.
It was De Bruyne who led the charge in the first half, when he was denied a second goal by the frame of the goal and he continued to dictate our attack after the break when he survived a series of robust challenges.
De Bruyne has scored six goals in his last six appearances and his opener means he has now netted in four in a row in all competitions for the first time for the Club.
What it means
City sit top of the Premier League with 74 points after 31 games, with Liverpool one place and one point behind.
We have lost just one of our previous 13 (W7, D5) league home games against the Reds and are unbeaten in our last five (W2, D3).
LIVERPOOL: Alisson, Alexander-Arnold, Matip, Van Dijk, Robertson, Henderson (Keita 78'), Fabinho, Thiago, Salah, Jota (Diaz 70'), Mane (Firmino (84').
SUBS: Konate, Milner, Gomez, Jones, Tsimikas, Kelleher.
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