Stan Collymore was booked and substituted as Nottingham Forest ruined his return to the City Ground by ending Liverpool's 20-match unbeaten run and severely damaging their Premiership title ambitions.
Forest's England winger Steve Stone grabbed the crucial goal three minutes before the interval following a mistake by Liverpool goalkeeper David James, who failed to hold a shot by Stuart Pearce and allowed Colin Cooper to set up Stone with a close-range strike into an empty net.
Stone was involved with former teammate Collymore in a bad tempered skirmish just after the interval which resulted in both players being booked.
And the £8.5 million Collymore, who left Forest in an acrimonious transfer to Anfield in the summer, had his misery completed when he was substituted 20 minutes from the end after an afternoon of sheer frustration.
Collymore was given a police escort into the ground before the start but slipped free of his markers in the Forest defence midway through the first half only to shoot straight at the legs of goalkeeper Mark Crossley.
Robbie Fowler, Collymore's 31-goal strike partner, chipped onto the crossbar with Crossley beaten 15 minutes later but Liverpool paid for their missed chances when Stone came up with the winner just before the break.
James had to take most of the blame although Pearce's shot was hit with typical power.
Yet Liverpool had enough possession to take at least a point even though Forest defended with tremendous spirit and discipline.
Collymore, subjected to fierce abuse from the home fans in the 29,000-plus crowd throughout his 70 minute appearance, tried time and again to launch solo bursts to break down the Forest rearguard. But central defenders Cooper and Steve Chettle were in solid form and provided the basis from which their team bounced back from the midweek UEFA Cup mauling by Bayern Munich.
Forest fought determinedly to block every avenue of approach from the Liverpool attack in which Steve McManaman and John Barnes were tireless competitors but marksman Fowler had an off-day and Forest keeper Crossley was only rarely troubled.
Liverpool thought he had gifted them the equaliser 12 minutes from the end when he appeared to drop Jason McAteer's corner over his own line but referee Paul Danson ruled that he had been fouled -- and made Neil Ruddock his fifth booking of the game for his protests.
Leicestershire official Danson kept Forest fans on tenterhooks by playing nearly five minutes of additional time as Liverpool surged forward frantically in search of an equaliser but there was no way past Cooper and Chettle as Frank Clark's team clung onto their first win in six matches.
Frank Clark berated the Nottingham Forest fans for their abusive treatment of former hero Stan Collymore, who was booked and then substituted as Liverpool's title challenge faded at the City Ground today.
After Forest had secured a 1-0 victory, Clark said: "I don't exactly feel sorry for Stan because he probably would have expected it." Clark fought Collymore at a transfer tribunal in November when the player unsuccessfully tried to claim five per cent of the record £8.5 million fee Liverpool paid Forest for him in the summer.
"But I think it is sad when people react like that," said Clark. "I wish they would channel their efforts into something more productive, although, to be fair, they did back the team today as well. I spoke to Stan before the game and he called me Mr Clark. I don't know if he was trying to upset me and make me feel old but our differences are in the past. The crowd's reaction was unfortunate but I am afraid that you can get this sort of thing at many grounds in such circumstances. It is silly but such is the state of the game these days."
Liverpool manager Roy Evans, who took off Collymore in the 70th minute, agreed: "He wasn't having the best of days but it is sad when somebody who has given such great service to a club gets a reception like that when he comes back."
Collymore had a police escort into the stadium when the Liverpool bus arrived and stewards guarded his exit afterwards. Evans said: "You will have to ask Stan if any of it affected him but I would not blame only him for our performance today. We just didn't create enough, especially in the first half when the game was there for the taking. It is very disappointing especially with Newcastle losing. This was the day for us to catch up but instead it is Manchester United who are laughing."
Liverpool suffered their first defeat in 21 matches thanks to a Steve Stone goal for Forest after the England winger pounced on a mistake by keeper David James, who could not hold a Stuart Pearce shot three minutes before the interval.
Stone was also booked in the flair up with Collymore just after the interval but it looked a minor skirmish and referee Paul Danson, who mysteriously added on nearly five minutes of injury time at the end, also booked three other players.
Clark admitted: "It was a bit like the Alamo at times when we were hanging on towards the finish but the players reacted marvellously to going out of Europe in midweek and getting all the criticism that came our way. Liverpool are still a hell of a good side and won't have written off their title chances yet but the games are running out for them."
Evans reported that all his England players are fit to report for international duty ahead of
Wednesday's Wembley international against Bulgaria and even full-back Rob Jones, who missed the match with a back injury, will join them.
Defender Phil Babb, however, has been pulled out of the Republic of Ireland team to face Russia on Wednesday having now missed three games with a toe injury.
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