Chris Brunt's 88th-minute penalty ensured West Brom came from behind to defeat Liverpool 2-1 as manager Roy Hodgson had the last laugh at the expense of his former club.
Martin Skrtel had given the visitors the lead shortly after half-time at The Hawthorns but the Baggies were deservedly level soon afterwards when Brunt calmly slotted home from the spot.
And the Northern Irishman was the hero when he once again kept his cool from 12 yards with just two minutes remaining on the clock after Peter Odemwingie had been hauled down inside the area by Pepe Reina.
It was enough to hand the Baggies vital breathing space at the bottom of the table, moving them four points clear of the Premier League relegation zone, while Liverpool's hopes of a late surge towards the European places have receded further still.
Yet this game will be remembered most for Hodgson gaining revenge over the Reds in what was his first game against them since his sacking in January.
Liverpool skipper Steven Gerrard was deemed not fit enough even to make the bench yet it was still the visitors who began the stronger.
Fresh from scoring for England against Wales last weekend, Andy Carroll used his towering frame to head a Raul Meireles corner towards Dirk Kuyt at the far post and the Holland international saw his first effort blocked on the line by Scott Carson before he blazed the rebound over the crossbar.
There was bad news for the Reds when left-back Glen Johnson was forced off with what appeared to be a hamstring strain, with Sotirios Kyrgiakos replacing him in the eighth minute.
Dalglish's team were undeterred, though, with Kuyt continuing to look their most potent threat and the Dutchman threatened again in the 20th minute with a low drive which flashed past the post following good work from Luis Suarez.
West Brom began to take control as the half progressed, though, and Reds goalkeeper Reina was extended for the first time in the 22nd minute when he had to be quickly down to his right to prevent Brunt's curling free-kick from 25 yards creeping inside his near post.
Liverpool's injury problems worsened in the 25th minute when another defender, Daniel Agger, hobbled off to be replaced by Danny Wilson.
The Baggies finished the half strongly and threatened twice in a matter of minutes when Nicky Shorey blazed over the bar from the edge of the area and then Reina, at full stretch, made a superb save to keep out Steven Reid's well-placed header.
Hodgson's team picked up where they left off upon resumption and Reina was quickly called into action when he did well to parry away Simon Cox's rifled effort.
Yet it was Liverpool who were celebrating by the 50th minute when Skrtel rose highest to emphatically power home Portugal international Meireles' inviting corner.
Their lead was to last just 12 minutes, however, when Brunt sent Reina the wrong way from the penalty spot after Odemwingie had been hauled down inside the area by Kyrgiakos.
Both sides had opportunities to win it with Odemwingie's piledriver blocked well by Reina, while Meireles saw his drive flash inches past Carson's far post, yet Brunt had the final say when he lashed home with two minutes to go.