City were unable to hold onto the lead given to them by Bernardo Silva as Marc Albrighton quickly equalised. Ricardo Pereira's 81st-minute strike proved to be the winner for Leicester.

With Liverpool comfortably beating Newcastle at Anfield, City's misery was compounded further by Fabian Delph's last-minute red card.

Jamie Vardy was deemed fit enough to play for the second time in five days, following his groin issues, as Leicester boss Claude Puel named the same side that started the win at Chelsea.

For City, Kyle Walker paid the price for his error-strewn performance in the home defeat to Palace as he was replaced at right-back by Danilo.

Sergio Aguero and Kevin De Bruyne were also back in the starting XI. Gabriel Jesus was injured and not in the squad.

Despite the changes, City remained sharp and dominated possession during the early stages. It was not quite clicking for Guardiola's side in the final third, though.

But when it did after 14 minutes, City led. Aymeric Laporte stepped out of defence and put a sharp pass into the feet of Aguero, who helped the ball on into the run of the unmarked Silva and he slotted his finish into the bottom corner of the net from 10 yards.

The lead did not last long, however. Five minutes later, Vardy raced down the left, getting inside John Stones too easily with Danilo out of position, and stood up a perfect cross to the far post for Albrighton to head home.

Both teams had chances before half-time but Kasper Schmeichel did well to keep out a powerful strike from De Bruyne, before Aguero scooped an effort over the crossbar from close range.

Leicester enjoyed a terrific spell of pressure just before the break, beginning when Vardy was denied by Ederson when through one on one with the City goalkeeper.

James Maddison then had an effort saved from a tight angle before Hamza Choudhury's follow-up was parried by Ederson and then hacked clear by Stones.

Chances were less frequent in the second half. A scramble inside the Leicester penalty area just after the hour mark saw Raheem Sterling and Leroy Sane denied by last-ditch blocks after Aguero had whipped a low cross into a dangerous area.

Schmeichel did well to hold onto an effort from Delph after the left-back had got forward, before shooting with his weaker right foot.

Pereira dealt a seismic blow to City's title challenge with nine minutes remaining when he latched on to Sane's header clear, before firing a right-foot shot beyond Ederson from the right side of the penalty box.

Delph caught Pereira with his studs on the follow-through after a swipe at the ball and was shown a straight red card by referee Mike Dean.

It helped condemn City to successive Premier League losses for the first time in two years, with that second defeat in December 2016 also coming at the King Power Stadium in a 4-2 reverse to Leicester.

For the Foxes, it completed a superb Christmas return of six points from fixtures against Chelsea and City and Puel's team are up to seventh in the table.