Georginio Wijnaldum scored the reds' final goal of 2016 helping the reds reach 43 points at the Premier League half-way stage.
Separated by just a point before kick off, Liverpool in 2nd hosted 3rd placed Man City in a battle to narrow the gap on Chelsea.
There was one change for the reds - with Emre Can returned to the side in place of Divock Origi, allowing Adam Lallana to ply his trade higher up the field.
Man City enjoyed a positive start to the game but the reds weathered the storm and in the eight minute took control of the big New Years Eve clash.
And the goal came from an unlikely source.
Taking advantage of a poor pass from City, the reds switched into attack mode - the ball found it's way to Adam Lallana on the left hand side.
He took his time and crossed into the box and the figure of Wijnaldum arrived to power a header into the Anfield Road end goal.
In a game of few clear cut chances - Wijnaldum's second goal of the season was a lethal execution in front of goal.
There were surprisingly few other clear cut chances in the entire game. The reds dominated the first half, Man City had the ball for most of the second half.
It was another disappointing game for Raheem Sterling against his former club. On this occasion it was James Milner who kept the former Liverpool winger in his pocket. Aguero and even De Bruyne had surprisingly quite games - kept in check by the likes of the impressive Klavan and Wijnaldum.
It has been the best opening half season for Liverpool in their Premier League history - but unfortunately the current leaders Chelsea have also set a half-season record.
This was the 9th meeting between the former Dortmund and Bayern Munich managers and this victory for Klopp gives him a 5-4 advantage.
The reds stay 6 points behind Chelsea, whilst Man City slip to 10 points behind.