Rafael Benitez's side come from behind twice to beat Portsmouth 3-2
Fernando Torres kept Liverpool's dream of a first English league title in 19 years alive with a stoppage-time winner at Portsmouth but Chelsea look dead and buried after yet another stumble.
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Rafael Benitez's side twice came from a goal down at Fratton Park before Torres, left on the bench until 15 minutes from time, met Yossi Benayoun's cutback with a bullet header to seal a 3-2 win that lifted the Reds a point clear of Manchester United at the top of the table.
The champions have played two games less but the resilience displayed by Liverpool on Saturday suggests the title battle is far from over.
"We showed character, determination to the end and desire," said a relieved Benitez, who had gambled on starting first-team regulars Torres, Dirk Kuyt and Xavi Alonso on the bench on a day when he was missing injured captain Steven Gerrard.
"We are in a good position and we are confident we can stay there. If we are near the top in the final month of the season, we can fight for the title."
Chelsea, though, appear to be out of the reckoning after a goalless draw at home to Hull left Luiz Felipe Scolari's side languishing in fourth place.
The Stamford Bridge stalemate meant the Blues have won just two of their last six matches in the league and enabled Aston Villa, 2-0 winners at Blackburn, to leapfrog them into third place.
If United win at West Ham on Sunday, Chelsea will find themselves eight points adrift of the leaders having played a game more and the jeers of their own fans spoke volumes about the club's decline.
Chelsea have now dropped 16 points at home this season and Scolari was conspicuous by his absence from the post-match inquest, leaving assistant Ray Wilkins to defend the man who guided Brazil to World Cup glory in 2002.
"People do pay a lot of money to watch football and if they want to boo then by all means come and boo," Wilkins said.
"But to say someone does not know what he is doing when he has achieved what he has in the game, is out of order."
Liverpool looked destined to drop points for the entire 90 minutes at Fratton Park.
Fabio Aurelio's strike cancelled out David Nugent's 62nd-minute goal but Pompey restored their advantage with only 12 minutes left thanks to a Hermann Hreidarsson header.
But Dirk Kuyt took advantage of some shoddy defending to lash in an 85th-minute equaliser, setting the scene for Torres to floor Tony Adams's side with virtually the last touch of the match.
Villa continue to go for strength to strength after what was a club record seventh consecutive away win in the league.
Milner's 27th-minute shot gave Martin O'Neill's side a first-half lead and Gabriel Agbonlahor deflected shot sealed the points in the final minute.
Brazilian striker Jo had a dream debut for Everton, who followed up their FA Cup win over Liverpool in midweek with a convincing 3-0 win over Bolton.
After winning the penalty that enabled Mikel Arteta to put his new club ahead five minutes before the break, Jo opened his Everton account four minutes after the break then added a last-minute penalty of his own.
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