Liverpool boss Gerard Houllier admits the Anfield defeat against Manchester United has left his team with a desperate struggle to stay in the title race.
Ryan Giggs scored twice in United's 2-1 victory as they joined Chelsea and Arsenal in winning at Anfield this season to leave Liverpool 13 points behind the leaders.
Harry Kewell pulled a goal back for Liverpool - and it was only a desperate late miss from Emile Heskey that stopped Houllier's side snatching a point.
Houllier admitted: "We know it will be difficult now. We know it is looking like a three-horse race but you never know. We have not had a third of the league.
"I said to the boys at the end of the day I think we have made some progress. I think we are going the right way.
"We are improving, but things have not been going our way and we have had some key players out because of injury.
"We are trying to play more creative but we were a bit unlucky at times with defensive errors."
Houllier refused to blame goalkeeper Jerzy Dudek for Giggs' double as he suffered another nightmare after he gifted Diego Forlan a goal at Anfield last term.
He said: ""I don't think so. They were good goals - that's all."
Houllier also defended under-fire Heskey for his miss, saying: "I do not want to blame Emile. He had sacrificed himself, battled for 90 minutes in Bucharest and it had been very demanding and difficult for
"Maybe he was just a bit tired at the end, even though I felt a draw would have been a fair result."
Houllier added:"I wouldn't think we deserved to lose. We dominated but had a dip in maybe 15 or 20 minutes in the second half and they took advantage of that and got two great goals.
"But we had a good reaction and had chances and I thought that was maybe a penalty when Rio Ferdinand tackled Florent Sinama-Pongolle.
"We should have had that penalty, although I am not blaming referee Graham Poll.
"He was probably seeing it from a different angle, but I have now seen it on TV and it is clear to me. At Old Trafford, I feel it would have been a penalty.
"I am disappointed with the result, but not the performance.
"I think probably in the first half we could have been more clinical. We gave them too much respect and they defended extremely well.
"But after they scored two goals we should we could go forward and create chances."