(CNN)England's Premier League champions look certain not to repeat last year's triumph as a resurgent Crystal Palace confined the visitors to fourth spot in the table with a shock 2-1 win.
Resurgent Crystal Palace shatter Manchester City's title hopes
Goals from Glenn Murray and Jason Puncheon either side of the break were enough to hold off a late challenge from City, who clawed back a goal with a Yaya Toure strike in the 78th minute.
It was not enough.
After an early scare from Wilfried Zaha, City turned the screw, with both David Silva and Sergio Aguero going close, but they couldn't make their dominance count.
City's attackers could not transform the lion's share of possession into goals and the team was resigned to continuing its spotted run of form that has seen the champions relinquish second place -- and then third -- to in-form Arsenal and resurgent crosstown rivals Manchester United, respectively.
City's shell-shocked manager Manuel Pellegrini appeared to concede any chance of retaining the title in the post-match press conference.
"I'm not talking about the title, I'm just trying to win our games and we will see at the end of the season. Every time you drop points it is a big blow but we must try to play in the way we did today because normally we win the game."
Nine points behind leaders Chelsea, who have a game in hand, Pellegrini acknowledged the gulf and suggested that his team's fate is out of his hands.
"We're just thinking about what we can do in trying to win our games and see at the end of the season which position we are in."
Pundits marveled at City's sudden fall from contention.
Palace has seen a renaissance of its own in recent months, with the introduction of Alan Pardew as manager -- the Londoner previously wore Palace's colors as a player -- firing up the squad and, by creeping up the table to 11th, edging towards the safety zone and making a strong case for inclusion in next year's Premier League.
"We had to lean on our character tonight, we've got some good professionals in this group and that showed. Today was about the resilience, the character, and it was a shame we didn't have enough offensive moments tonight but it's a great result for the club, our fans were terrific," Pardew said after the final whistle.
"We've got three games (against Sunderland, West Brom and Hull City) now, a good little run for us, then we come in against the big boys. We'll just keep creeping up the league if we can and keep setting our goals that little bit further."
City will head into Sunday's derby match with United in dour spirits. One of the highlights of the domestic calendar, City have taken the spoils on the majority of recent Manchester derby occasions but on current form, the weekend's visit to the United's "Theater of Dreams" could well end up another nightmare for Pellegrini.