Manchester City’s unhappy Christmas continued as Leicester fought back from a goal down to inflict another defeat on the champions, their third in four Premier League matches. Pep Guardiola’s side thus fall below Spurs to third in the table, seven points adrift of the leaders, Liverpool. The title is a two-horse race? Guardiola hopes not.

His team host Liverpool a week on Thursday. They will need to play much better than they did here if they are to prevent Jürgen Klopp’s team from opening up a bigger lead. Weaknesses were all too apparent in the champions here: a brittle defence, curious flatness in midfield and a frazzled disposition under pressure, exemplified by Fabian Delph’s red card for following through into Ricardo Pereira’s leg after winning the ball in the 89th minute. Leroy Sané was the only one of the visitors’ attackers to perform anywhere close to his best. Leicester deserved to add the scalp of Guardiola’s team to that of Chelsea, which they claimed on Saturday.

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At first it seemed as if this would be a stress-free return to routine for the visitors after Saturday’s shock home defeat by Crystal Palace. They enjoyed a comfortable start as Claude Puel decided to adopt the same cautious approach that yielded victory at Stamford Bridge, redeploying the same lineup and ordering 11 players to retreat deep behind the ball when their opponents had possession.

Manchester City did little with it until the 14th minute, when Aymeric Laporte accepted the invitation to stride forward and pinged a low pass to Sergio Agüero, who took one touch to control it and another to flip it into the path of Bernardo Silva. The Portuguese midfielder guided a low shot past Kasper Schmeichel. Normal service had resumed. But not for long.

Facebook Twitter Pinterest Fabian Delph is sent off to compound Manchester City’s misery at the King Power Stadium. Photograph: Shaun Botterill/Getty Images

Now Leicester decided to take the fight to their visitors, whose weaknesses quickly became apparent. Within five minutes the hosts were level. Their equaliser came from a move that began when Ben Chilwell won the ball near halfway with a challenge on Danilo almost right in front of Guardiola, who is said to be such an admirer of the young English full-back that Manchester City are mulling over a transfer bid. From the tackle, Wilfried Ndidi and James Maddison helped the ball forward to Vardy on the right. The striker curled a lovely cross to the far post, where Albrighton arrived on the blind side of Delph and tucked a neat header into the far corner.

The champions were looking frail at the back and inadequate in midfield, with Fernandinho still absent with knee trouble and David Silva on the bench. Kevin De Bruyne was below par and so, too, was Raheem Sterling, eclipsed by Chilwell. Recognising his team’s opportunity, Puel adjusted his tactics on the half hour, swapping from a 4-5-1 to a four-man midfield, pushing Maddison forward to support Vardy.

That made Leicester more dangerous, although Manchester City were the first to threaten after the switch, Agüero dabbing over the bar from six yards after a cross by Sané. Bernardo Silva almost gifted Leicester the lead in the 39th minute, playing a careless back-pass to Vardy. Ederson granted the midfielder a pardon in the form of a fine save from Vardy’s shot.

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The goalkeeper was very busy for the next few minutes as Leicester created three more excellent chances before the break. First Ederson saved from Maddison after a dainty swivel and shot by the midfielder, then he parried a shot by Hamza Choudhury, who had snuck into the space behind Delph. Next, following a misjudgment by Danilo, Chilwell crossed for Vardy, who stabbed wide from close range. Half-time was a welcome chance for the frazzled visitors to compose themselves.

They dominated the early part of the second half but Leicester kept them at bay. Puel tried to get his team back on the front foot by introducing Demarai Gray on the hour in place of Choudhury. But Wes Morgan had to make a superb tackle to prevent Sané from scoring at a pull-back by Agüero.

Guardiola’s acknowledged De Bruyne’s subdued performance by substituting him in the 70th minute, turning to David Silva for inspiration. The Spaniard soon slipped a canny ball through to Sané, who had it nicked off him in the box by a splendid sliding tackle from Harry Maguire. That was Puel’s cue to make another tweak by replacing Maddison with Danny Simpson to help Pereira quell the rising menace from Sané. He cannot have imagined the tables being turned as spectacularly as they were in the 82nd minute. That was when Sané headed an Albrighton corner to the edge of the area, where Pereira collected the ball and rocketed an unstoppable shot into the top corner.

As time ticked down, Delph was ordered off for an ugly follow-through on a tackle on Pereira.