DJ Campbell took advantage of some woeful defending as Blackpool completed the league double over Liverpool.
The visitors took an early lead when Fernando Torres fired a fierce drive high into the net after being fed by Reds full-back Martin Kelly.
The Seasiders equalised soon after when Gary Taylor-Fletcher made the most of slack marking to slot home.
And Campbell handed Blackpool victory after he was left alone in the six-yard area to nod in.
The marking for the goal was as shocking as Liverpool's loss of confidence as the match progressed.
It began well for Reds manager Kenny Dalglish, who was taking charge of his first Premier League match in 12 years.
Although Torres's performance level declined like that of his team-mates during the 90 minutes, the Spain international's goal in the third minute proved that if the ball is played behind the defence then he is still the striker you would bank on.
It took him only two minutes to light up the night at Bloomfield Road when he smashed in high past Blackpool goalkeeper Richard Kingson after he was supplied by Kelly.
That settled the Merseysiders for a short while but it did not blunt the home side's spirit.
The men in tangerine gamely battled for every first and second ball in midfield and were rewarded for their pressing 10 minutes after Liverpool's opener.
Raul Meireles was the victim of the home side's hustling on this occasion giving the ball away to the impressive David Vaughan who slipped in Taylor-Fletcher. The striker sold Daniel Agger with the best dummy of the night before placing his shot past keeper Pepe Reina.
The goal seemed to unsettle the visitors, who began to look like the shaky side their supporters have become accustomed to watching this season.
Campbell should have scored earlier but missed with a header from four yards at the far post before Taylor-Fletcher came close to adding a second when he curled an effort over the stranded Reina, who should have been punished for a poor clearance.
The pain continued for Dalglish's men after the break when Reina was forced to palm away a stinging 20-yard effort from Charlie Adam, who had recovered from worrying fall in the first half.
The Liverpool keeper was then called into action once more, tipping Vaughan's effort over the bar after the wily midfielder created space in the box.
As lax as the visitors' defence was, Blackpool's backline was solid. In the first half the Seasiders cut out final balls to Meireles, one of Liverpool's best players, on two occasions and after the break the brilliant Craig Cathcart got enough on his headed clearance to prevent Torres from planting into the net at the far post.
Kingson also played his part when he made a good low save to deny Dirk Kuyt's placed effort.
Having absorbed the Reds' limited pressure, Blackpool responded with their second goal which proved the winner.
The visitors' undoing was caused by a diagonal ball from the right which was nodded into the six-yard area by Ian Evatt and finished off by Campbell.
Blackpool thus achieved their first double over Liverpool since the 1946-47 season but more significantly they leapfrogged their opponents in the table with a game in hand.