Bolton moved out of the bottom three after taking full advantage of some slack defending to sink Liverpool.
Mark Davies opened the scoring early on when he drifted through the centre and found the bottom corner from 15 yards.
Nigel Reo-Coker added a second when he chested down and slotted in, but Craig Bellamy gave the Reds hope as he lifted the ball over goalkeeper Adam Bogdan.
However, Gretar Steinsson's volley ensured that Bolton picked up their first points over Liverpool since 2006.
Much of the pre-match talk had surrounded Liverpool's lack of goals, their lowest at this stage of the season since the inception of the Premier League 20 years ago.
It was not expected that their defence would come under the same scrutiny, against a Bolton side with the worst record in English senior football, who had won only one of their 10 home games, kept only two clean sheets and lost their last 10 matches against the Reds.
Only Manchester City had conceded fewer goals than Kenny Dalglish's side, but that was scarcely believable in a shaky opening few minutes.
Davies was first to pierce the Liverpool backline. He was allowed to drift through the heart of the defence from midway inside the Liverpool half, and with three players delaying making a challenge, he fired home clinically.
Moments later, Liverpool full-back Jose Enrique dwelt on the ball for too long on the touchline and was dispossessed by the intrepid Chris Eagles who jinked along the byeline, but his prod across goal failed to find a team-mate.
Liverpool's main hope was an appeal for a penalty after the ball brushed Zat Knight's hand in the area, but referee Kevin Friend was unimpressed with their impassioned pleas.
DID YOU KNOW?
This was the first time Bolton have scored three goals in a league game against Liverpool since 1950
Less than a minute later they found themselves two goals down.
A lack of midfield cover was evident again when Eagles was allowed to ghost through a gap and find Reo-Coker, who controlled the chip and tucked the ball away from six yards.
Striker Andy Carroll, without a goal in his last 10 appearances for Liverpool, was proving more effective as a contributor than a finisher. First, he sent in a dangerous cross from the left, then a neat right-footed pass freed Bellamy whose first-time shot was straight at Bogdan.
However, the same combination gave their team a lifeline. Carroll flicked on and Bellamy raced clear before delicately chipping in his seventh goal of the season.
It seemed the momentum was with Dalglish's side and that they would gain the upper hand in the second-half, but soon after the interval their defensive frailties were exposed again.
There were question marks about whether Martin Petrov's corner had gone out of play before curling into the six-yard box, but no debate over Steinsson's clinical finish after Trotters defender David Wheater had outjumped a static Liverpool defence at the far post.
Liverpool defender Daniel Agger hit the top of the bar with a rasping 25-yard effort and Bellamy, who was involved in a continual spat with Reo-Coker, tested Bogdan with a low shot.
However, the visitors could not find sufficient quality to salvage something from the trip and now face a critical week to keep their season alive with cup ties against the two Manchester giants.
Live Text Commentary
Full Time The final whistle goes and the game is over.90:00 +1:55
David Wheater restarts play with the free kick.90:00 +1:55 Booking
Booking Caution for Dirk Kuyt.90:00 +1:49
David Wheater fouled by Dirk Kuyt, the ref awards a free kick.90:00 +1:17
Dirk Kuyt is flagged offside by the assistant referee. Samuel Ricketts restarts play with the free kick.90:00 +0:48 Substitution
Substitution Tuncay Sanli is brought on as a substitute for Chris Eagles.89:30
Free kick awarded for a foul by Fabrice Muamba on Steven Gerrard. Steven Gerrard takes the direct free kick.87:18
Mark Davies restarts play with the free kick. Effort from the edge of the box by Chris Eagles goes wide of the right-hand upright.87:18 Substitution
Substitution David Ngog leaves the field to be replaced by Kevin Davies.87:18
Unfair challenge on David Ngog by Dirk Kuyt results in a free kick.86:52
A cross is delivered by Stewart Downing, blocked by Zat Knight.83:50
Martin Petrov produces a left-footed shot from the edge of the area and misses to the left of the target.83:24
Corner taken left-footed by Martin Petrov from the left by-line to the near post, Steven Gerrard makes a clearance.83:10
Chris Eagles takes a shot. Daniel Agger gets a block in.81:24
Steven Gerrard challenges Martin Petrov unfairly and gives away a free kick. Adam Bogdan restarts play with the free kick.80:53
Shot from just outside the box by Chris Eagles misses to the right of the target.78:42
David Ngog challenges Daniel Agger unfairly and gives away a free kick. Martin Skrtel takes the free kick.77:35
Craig Bellamy takes a shot. Adam Bogdan makes a comfortable save.75:25
The official flags Dirk Kuyt offside. Adam Bogdan takes the free kick.73:23
Free kick awarded for a foul by Martin Skrtel on David Ngog. Free kick taken by Samuel Ricketts.
David Ngog concedes a free kick for a foul on Martin Skrtel. Indirect free kick taken by Jose Reina.73:00
Free kick awarded for an unfair challenge on Nigel Reo-Coker by Steven Gerrard. Free kick taken by Adam Bogdan.72:29
Andy Carroll takes a shot.71:52
David Ngog takes a shot. Blocked by Sanchez Jose Enrique.70:20
Daniel Agger takes a shot.69:38
Chris Eagles produces a right-footed shot from just outside the penalty box that misses to the left of the target.69:17
Effort from a long way out by Nigel Reo-Coker goes wide right of the target.66:36
Inswinging corner taken by Craig Bellamy from the left by-line played to the near post, Header from deep inside the penalty area by Andy Carroll goes harmlessly over the crossbar.66:07
Centre by Craig Bellamy, clearance by Zat Knight.65:05
Long distance shot from David Ngog misses to the left of the net.62:53
Zat Knight takes the free kick.62:53 Substitution
Substitution Stewart Downing joins the action as a substitute, replacing Charlie Adam.62:53 Substitution
Substitution Rodriguez Maxi goes off and Dirk Kuyt comes on.62:53
Charlie Adam gives away a free kick for an unfair challenge on Nigel Reo-Coker.62:04
Free kick crossed right-footed by Chris Eagles, Jordan Henderson manages to make a clearance.62:04 Booking
Booking Sanchez Jose Enrique is shown a yellow card for unsporting behaviour.61:59
Free kick awarded for a foul by Sanchez Jose Enrique on Chris Eagles.61:00
Outswinging corner taken left-footed by Martin Petrov from the left by-line, Andy Carroll makes a clearance.60:31
Martin Petrov takes a outswinging corner from the left by-line to the near post, clearance by Daniel Agger.59:00
Corner from the left by-line taken by Steven Gerrard, Adam Bogdan makes a comfortable save.58:54
Centre by Charlie Adam, Zat Knight makes a clearance.58:47
The ball is crossed by Steven Gerrard, clearance made by Gretar Rafn Steinsson.57:52
David Ngog takes a shot. Glen Johnson gets a block in.57:15
Rodriguez Maxi is penalised for handball and concedes a free kick. Free kick taken by Nigel Reo-Coker.55:24
The ball is sent over by Charlie Adam, save by Adam Bogdan.52:37
Sanchez Jose Enrique delivers the ball.49:19
David Wheater provided the assist for the goal.49:19 Goal scored
Goal! - Gretar Rafn Steinsson - Bolton 3 - 1 Liverpool Gretar Rafn Steinsson finds the net with a goal from inside the area to the bottom left corner of the goal. Bolton 3-1 Liverpool.48:59
Corner from the left by-line taken by Martin Petrov,47:00
Charlie Adam takes a shot. Blocked by Zat Knight.46:02
Unfair challenge on Charlie Adam by Fabrice Muamba results in a free kick. Free kick taken by Jose Reina.45:01
The second half kicks off.45:00 +3:28 Half time
Half Time The referee calls an end to the first half.45:00 +2:00
David Ngog fouled by Charlie Adam, the ref awards a free kick. Strike comes in from Martin Petrov from the free kick, save made by Jose Reina.45:00 +1:28
Inswinging corner taken by Craig Bellamy from the left by-line, save by Adam Bogdan.45:00 +1:14
Steven Gerrard takes a shot. Save by Adam Bogdan.45:00 +0:33
The ball is crossed by Craig Bellamy, clearance made by Gretar Rafn Steinsson.43:28
The referee blows for offside against Craig Bellamy. Zat Knight restarts play with the free kick.41:54
The assistant referee signals for offside against Craig Bellamy. Adam Bogdan restarts play with the free kick.41:40
The ball is swung over by Martin Petrov, save made by Jose Reina.41:16
Craig Bellamy takes a shot. Save by Adam Bogdan.37:48
Unfair challenge on Nigel Reo-Coker by Craig Bellamy results in a free kick. Chris Eagles crosses the ball from the free kick right-footed from right wing.36:01
Assist on the goal came from Andy Carroll.36:01 Goal scored
Goal! - Craig Bellamy - Bolton 2 - 1 Liverpool Craig Bellamy scores a goal from inside the box low into the middle of the goal. Bolton 2-1 Liverpool.34:57
Nigel Reo-Coker concedes a free kick for a foul on Charlie Adam. Daniel Agger restarts play with the free kick.34:17
Craig Bellamy takes a shot. Save by Adam Bogdan.33:18
The ball is sent over by Andy Carroll.31:34
Inswinging corner taken by Craig Bellamy, comfortable save by Adam Bogdan.31:25
Centre by Sanchez Jose Enrique, clearance made by David Wheater.30:44
Craig Bellamy delivers the ball, clearance by Zat Knight.30:31
David Ngog concedes a free kick for a foul on Daniel Agger. Indirect free kick taken by Daniel Agger.28:39
Assist by Chris Eagles.28:39 Goal scored
Goal! - Nigel Reo-Coker - Bolton 2 - 0 Liverpool Nigel Reo-Coker finds the net with a goal from inside the six-yard box to the top left corner of the goal. Bolton 2-0 Liverpool.27:31
Foul by David Wheater on Andy Carroll, free kick awarded. Free kick crossed left-footed by Charlie Adam from left channel, save made by Adam Bogdan.24:10
Corner taken by Martin Petrov.24:06
David Ngog crosses the ball, Glen Johnson gets a block in.23:27
Chris Eagles takes a shot. Save by Jose Reina.23:05
The assistant referee flags for offside against Andy Carroll. Adam Bogdan restarts play with the free kick.20:31
Chris Eagles challenges Rodriguez Maxi unfairly and gives away a free kick. Steven Gerrard crosses the ball from the free kick right-footed from left wing, Zat Knight manages to make a clearance.18:47
Craig Bellamy gives away a free kick for an unfair challenge on Zat Knight. Zat Knight takes the direct free kick.17:35
Jordan Henderson has an effort at goal. Save made by Adam Bogdan.17:12
Centre by Martin Petrov, save made by Jose Reina.15:04
Nigel Reo-Coker fouled by Charlie Adam, the ref awards a free kick. Nigel Reo-Coker delivers the ball from the free kick right-footed from right wing, save by Jose Reina.13:57
Craig Bellamy takes a shot. Samuel Ricketts gets a block in.13:19
Inswinging corner taken by Craig Bellamy from the left by-line, clearance made by Zat Knight.13:09
The ball is swung over by Jordan Henderson, clearance made by Gretar Rafn Steinsson.9:38
Handball by Rodriguez Maxi. Adam Bogdan restarts play with the free kick.8:46
Unfair challenge on Gretar Rafn Steinsson by Steven Gerrard results in a free kick. The free kick is swung in left-footed by Martin Petrov, save by Jose Reina.7:02
Chris Eagles takes a shot.5:56
Charlie Adam gives away a free kick for an unfair challenge on Chris Eagles. Free kick crossed by Martin Petrov, clearance made by Daniel Agger.4:47
Free kick awarded for a foul by Nigel Reo-Coker on Daniel Agger. Direct free kick taken by Daniel Agger.3:01
Assist by David Ngog.3:01 Goal scored
Goal! - Mark Davies - Bolton 1 - 0 Liverpool Mark Davies finds the net with a goal from inside the area to the bottom right corner of the goal. Bolton 1-0 Liverpool.2:01
Sanchez Jose Enrique fouled by David Ngog, the ref awards a free kick. Sanchez Jose Enrique takes the indirect free kick.0:59
Jordan Henderson crosses the ball.0:00
The referee gets the match started.
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