An 82nd minute strike from Gareth McAuley secured all three points for West Brom at the Hawthorns to deal a fresh blow to under-fire Chelsea manager Andre Villas-Boas, reportedly battling to hang on to his job.
The defeat left Chelsea three points adrift of the top four after Arsenal's push for Champions League qualification was given fresh momentum following a dramatic 2-1 win over Liverpool in Saturday's early kick-off.
"It wasn't good enough and it's not been good enough for quite some time," Villas-Boas said afterwards. "We are fifth and something is wrong.
"We don't win enough games and they are not numbers that make us proud. In football there is joy and there is pain."
Villas-Boas would not be drawn on his future. "You have to ask the owners not me whether I will get another chance," he told the BBC.
Chelsea's points haul of 46 after 27 games is their lowest at this stage of the season since the 2001/2002 campaign.
Elsewhere, leaders City cruised to a 2-0 win over Bolton courtesy of an own goal from Gretar Steinsson and a strike from Mario Balotelli.
The win preserved City's 100 percent home record and left second-placed Manchester United needing to get a result at Tottenham on Sunday to reduce their rivals' lead at the top.
City manager Roberto Mancini meanwhile confirmed that goalscorer Balotelli could face disciplinary action after being photographed leaving a Liverpool strip club in the early hours of Friday morning.
"I will speak to him tomorrow before deciding about the maximum fine I will do," Mancini said. "I'm really disappointed. I will stick with him because he's a good player but I will speak to him about the fine."
Earlier, Robin van Persie struck an injury-time winner as Arsenal shattered Liverpool's hopes of Champions League qualification at Anfield.
Dutch international van Persie volleyed home magnificently in the third minute of stoppage time to claim his second of the match and take his season's tally to 31 in all competitions.
Van Persie had earlier equalised for Arsenal after a Laurent Koscielny own goal had given Liverpool the lead.
But the defeat has left Liverpool with a mountain to climb if they are to secure a return to Europe's elite next season, with 10 points now separating them from Arsenal in fourth.
Van Persie admitted Liverpool had been unlucky to lose.
"I don't think we deserved it if I'm being honest because Liverpool played better but to nick it like we did -- we can only be pleased," the striker said.
Arsenal boss Wenger hailed the contribution of his match-winning striker.
"When you see the ball land at the feet of Van Persie you know what he can do," Wenger said. "We cannot afford to lose him. Overall you have to give him credit because in every match he does something special."
Liverpool manager Kenny Dalglish was struggling to come to terms with defeat after a match which saw the Reds miss their sixth penalty of the season and a string of clear scoring opportunities.
"It's difficult to believe but that's the way it goes, we played some fantastic stuff and came away with nothing," Dalglish said.
"The scoreline doesn't reflect the game. We showed what we are capable of in the first half.
In other games Saturday, Wigan's problems worsened as they were beaten 2-0 at home by Swansea.
Two goals from Gylfi Sigurdsson set up the victory for the Welsh side as Wigan remained firmly rooted to the bottom of the table.
Swansea finished the game with 10 men after Nathan Dyer was sent off in the second half but Wigan were unable to mount a fightback.
Queens Park Rangers came from behind to secure a 1-1 draw against Everton at Loftus Road.
Royston Drenthe gave Everton the lead, punishing slack play by QPR midfielder Adel Taarabt to open the scoring on 31 minutes with a long-range effort.
But QPR hit back through transfer window signing Bobby Zamora, the former Fulham striker heading in Akos Buzsaky's free-kick to level in the 36th minute.
Blackburn meanwhile scrambled a 1-1 draw with Aston Villa at Ewood Park after David Dunn's equaliser five minutes from time cancelled out Charles N'Zogbia's first half opener.
Meanwhile Stoke beat Norwich 1-0 at the Britannia Stadium after Matthew Etherington's second-half strike settled a drab encounter.
Source: AFP
Source: AFP