Liverpool Reserves slipped to a third consecutive defeat as they were beaten 3-1 by Burnley at Turf Moor on Friday night - leaving their title hopes hanging by a thread.
Alex MacDonald gave the hosts an early lead when he deflected Neil Yadolahi's powerful header beyond Martin Hansen from yards out.
Frederic Nimani made it two soon after following a mistake by the Reds' goalkeeper before Nikola Saric reduced the arrears with a smart finish, benefitting from good play by David Amoo.
However, a costly error by Chris Mavinga sent Nimani through on goal, with the striker making no mistake just before the interval, and the visitors were unable to muster a second-half fightback as Burnley saw out the game to claim the win.
The result leaves Liverpool nine points behind Manchester United with just three matches remaining.
The Reserves went into the clash in Lancashire determined to return to winning ways following consecutive defeats to Wigan Athletic and United.
The 1-0 reversal against United allowed the Old Trafford side to open up a nine point cushion on Liverpool at the top of the Barclays Premier Reserve League North - though with Reds having two games in hand at the start of the day, McMahon insisted no-one at Anfield would be throwing in the towel.
And the visitors fired a statement of intent inside four minutes. Amoo flicked Gerardo Bruna's pass into the run of Saric, who drilled narrowly wide of the post from the edge of the area.
However, Burnley took the lead in the seventh minute as Yadolahi powered a header towards Hansen's goal from a corner, which found the back of the net via a deflection off MacDonald.
It was 2-0 within moments when Hansen flapped at a corner, allowing Nimani to head home from close-range, with Steven Irwin's attempts to clear off the line ultimately in vein.
Hansen went some way to atoning for his error, blocking Nimani's low strike following a mazy surge into the box by the on-loan Monaco striker.
Nimani was causing all sorts of problems and it was his cross that found Benjamin Hoskin, whose stinging volley was turned around the base of the post by Liverpool's goalkeeper.
It was proving to be an open contest and Alex Kacaniklic perhaps should have done better when Francisco Duran's piercing through ball played him in behind Jake McEneaney, though his final shot was off target.
The whirlwind start showed no signs of letting up as the Reds pulled one back on 20 minutes.
Amoo used his strength and pace to hold off two Burnley challenges down the right and delivered a dangerous low cross to the near post, which was expertly converted by Saric.
Back came Burnley and Christopher Anderson thumped a header over the crossbar after more good work by Nimani.
Saric felt he should have been awarded a penalty as half-time edged closer. Latching on to a ball forward, the Dane tried to control inside the box and though his first touch took the ball away from goal, he was sent crashing to the ground by Kevin Long's barge.
It proved a key moment as Burnley extended their lead when Mavinga's attempted header towards his own area from the half way line sent Nimani bearing down on goal. The French U21 international retained his composure to slot beyond Hansen.
Burnley started the second half in similar fashion - with Nimani again at the hub. This time his deep cross sort out Adam Kay and the midfielder struck an effort goalwards, only to see Alex Cooper produce a fine block.
However, the tempo of the game had significantly dropped off after such a busy opening 45 - McMahon opted to introduce Finnish hotshot Lauri Dalla Valle into the action just after the hour mark in an attempt to bolster the Reds' cutting edge.
It was fellow substitute, Nicolaj Kohlert, who had Liverpool's best chance of the second period on 75 minutes when the Danish starlet nodded an Irwin centre wide when well positioned.
Amoo headed against the crossbar from a corner as time ebbed away, but McMahon's side were unable to test 'keeper Daniel MacDonald as Burnley continued to control the game.
In fact it was the Clarets who looked the more dangerous in the latter stages as they condemned Liverpool to their second defeat of the week.