A Djibril Cisse penalty rescued Liverpool after a Stephen Warnock own goal and a Jose Reina fumble looked to have given Birmingham an unlikely win.
Luis Garcia had given Liverpool the lead on 68 minutes with a slick finish.
Birmingham went in front after Warnock headed past Reina and the Liverpool goalkeeper then spilled, allowing Walter Pandiani to force the ball home.
But Neil Kilkenny was red-carded after handling on the line and Cisse stepped up to stroke the ball past Taylor.
Given the mind-numbing tedium of the opening hour few would have guessed the last 22 minutes would provide four goals and a sending off.
It was only after Garcia's introduction that the visitors began to open up the Birmingham defence.
Before Garcia's arrival Liverpool's deployment of Peter Crouch as a lone-striker had seen them control midfield, but it was a tactic that provided insufficient support for the England international.
Occasionally Gerrard escaped the crowded midfield to get forward in support of Crouch.
In the opening minute after a pbutting move involving Josemi, Crouch and Bolo Zenden, the ball reached Gerrard, whose close-range effort was blocked by Taylor.
In the opening stages Birmingham struggled to create a worthwhile chance.
Finally on 25 minutes Emile Heskey shrugged off Jamie Carragher and hit a powerful low shot that Reina cleared with his feet.
Birmingham's attacking cause was not helped by a strangely out of sorts Mikael Forssell and he was eventually replaced by Pandiani.
Heskey's effort drew a quick riposte from Liverpool.
Gerrard exchanged a one-two with Crouch and then bent a curling shot past Taylor only for the ball to cannon back off the post.
Gerrard began the second period in bullish mood, imperiously striding into the Birmingham area only to sky his shot wide.
Garcia's introduction for Zenden produced immediate results.
He made a clever run from right to left to pick up Gerrard's pbutt and then calmly side-footed past Taylor.
Liverpool looked in control, but poor defending found them chasing the game as they conceded twice in the space of three minutes, the first goals Rafa Benitez's side have conceded this season.
Poor communication between Reina and Warnock saw the young England defender head past his keeper.
With 15 minutes to go Reina spilled Heskey's header for Pandiani to force the ball in after two attempts.
Liverpool surged forward in search of the equaliser and were rescued after Kilkenny handled on the line, with Cisse making no mistake with the penalty.
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Birmingham: Maik Taylor, Melchiot, Cunningham, Upson, Clapham, Pennant, Johnson, Kilkenny, Gray, Forssell, Heskey. Subs: Martin Taylor, Pandiani, Lazaridis, Vaesen, Tebily.
Liverpool: Reina, Josemi, Carragher, Hyypia, Warnock, Sinama Pongolle, Alonso, Hamann, Gerrard, Zenden, Crouch. Subs: Finnan, Riise, Cisse, Luis Garcia, Carson.
Referee: S Bennett (Kent)
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