The Reds were 3-0 winners against the Citizens at Anfield last week thanks to goals from Mohamed Salah, Alex Oxlade-Chamberlain and Roberto Firmino.
Manchester City squandered a 2-0 lead to lose 3-2 to Manchester United last weekend to deliver a further blow to their confidence.
However, the Citizens were 1-0 up inside two minutes after Gabriel Jesus cooly slotted past Liverpool FC goalkeeper Loris Karius.
The Reds were camped inside their own half throughout much of the first half and Andy Robertson was fortunate not to concede two penalties.
Summer signing Bernardo Silva hit the woodwork before Leroy Sane had a goal controversially ruled out for offside on the stroke of half-time.
Liverpool FC equalised thanks to Mohamed Salah’s 39th goal of the season in all competitions after a surging run from Sadio Mane.
Firmino sealed Liverpool FC’s place in the Champions League semi-final draw with a precise finish midway through the second half.
Former Liverpool FC captain Gerrard heaped praise on the Reds for a strong performance at the Premier League leaders.
“This Liverpool team are hard to contain for 90 minutes, especially if you set up as boldly as Man City did,” Gerrard told BT Sport.
“I always felt confident that Liverpool would have a moment [to score] and that’s all they needed. As soon as that goal game, it was game over.”
Liverpool FC haven’t won the Champions League title since 2005 when Gerrard helped to inspire the Reds to European glory.
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