Robbie Fowler celebrated his 50th game in a Liverpool shirt with the goal that felled Forest and condemned Frank Clark's side to their second successive defeat.
The 19-year-old was on hand to turn Jamie Redknapp's 14th minute shot past Mark Crossley for his 14th goal of the season, which put the Anfield side back on course for a real tilt at the title after their surprise 2-1 defeat at Queens Park Rangers.
Although the goal was against the run of play at the time, the home fans should have been cheering an easy victory by the final whistle as Liverpool took total charge with the normally lethal Fowler spurning two gift-wrapped chances.
Liverpool boss Roy Evans resisted the temptation to alter his defensive system in the wake of the Loftus Road defeat. Phil Babb was retained in a five-man back division and, in the early stages, this looked like being a mistake.
Forest, with Dutch star Bryan Roy having to work overtime in the continued absence of Stan Collymore, had the ball in the net in the second minute when he stabbed home Jason Lee's cross but a linesman's flag ruled the effort out.
Lee and David Phillips both then tested David James before Steve McManaman finally stirred the home side into action with a 13th minute run and shot just wide from the edge of the box.
A minute later, Liverpool were ahead. Stuart Pearce put Mark Crossley under pressure with his back pass but that did not excuse the keeper hitting his clearance straight at Jamie Redknapp. The midfielder controlled and shot but his effort, although not on target, would surely have not beaten Crossley had Fowler not altered its direction.
Forest were still lively, Lee twice finishing disappointingly, although things did appear to be going their way when Jan Molby replaced the struggling John Scales in the Liverpool defence.
Molby made a vital clearance when Lars Bohinen crossed low and although Redknapp did test Crossley from a distance either side of the break, a woeful clearance by Jan Molby straight to Lee, should have resulted in the equaliser seconds after the interval, the Forest man chipping straight into James' hands.
Fowler's persistence resulted in McManaman blasting over and Ian Rush was then wide before the goalscorer spurned the easiest of chances.
Molby exchanged passes with John Barnes and crashed a shot against Crossley's left hand upright. The ball rebounded to Fowler's feet but when the striker attempted to put the ball into a gaping net, he instead shot wide.
Forest nearly made Liverpool pay when Babb was forced into a desperate clearance after a Fowler advance.
Liverpool should have made sure of the points three minutes from time. Redknapp's cross from the right found Fowler all alone with only Crossley to beat but the youngster snatches at the chance, allowing the keeper to block.
Liverpool manager Roy Evans admitted: "It was probably our most important game so far. We had a hiccup against Rangers - and we hoped it was only going to be a hiccup and not a disaster - so I was pleased with the reaction. We started slowly and they were the better team before the goal, but I couldn't fault the effort either defensively or in attack - although it wasn't a vintage performance."
The winning goal was claimed by Robbie Fowler - his 14th of the season - after his shin diverted Jamie Redknapp's shot past Mark Crossley. "Jamie tried to claim it and started to celebrate, but then he looked around and saw I was as well," said Fowler. "It came off my leg and somebody said it might have been going wide."
Fowler added: "I only had three touches in the game and two of them were bad misses so at least I got something right and that was an important win."
Forest boss Frank Clark had no doubt that Liverpool deserved the points. He said: "They played better than we did. We started well but the last thing you want to do at Anfield is concede an early goal. It's hard to say whether it had more effect on them or us but it was an uphill struggle after that. We didn't show enough quality in the final third of the pitch. We had opportunities to go and punish them and create things but we just didn't make the best of them."
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