MANCHESTER: Pep Guardiola warned his Manchester City players they must learn from their mistakes after a shock 3-2 home defeat by struggling Crystal Palace left them four points behind leaders Liverpool at the top of the Premier League.

The win ended City's perfect home form in the league this season after nine victories from their opening nine matches and arrived 28 years to the day since Palace lost won on the road against the Blues.

It also featured a magnificent 30-yard volley from Andros Townsend that was heralded instantly as a goal-of-the-season contender.

But after defeat at Chelsea earlier this month City have now lost two of their past three league fixtures and know they are in a real fight to hold onto their league title in a New Year that opens with Liverpool visiting the Etihad on January 3.

"I said at Stamford Bridge, I have few regrets," said Guardiola. "You just have to improve and these kind of situations won't happen in the future."

Guardiola was also left to ponder his team selection, having left Sergio Aguero and Kevin De Bruyne on the bench in the first half as the pair recover from injury lay-offs.

The City manager was also without injured Brazilian Fernandinho and took the gamble of playing England centre-half John Stones in the holding midfield role -- not that Guardiola was in the mood for second guessing himself.

"I don't know. I'm only the manager," he said. "I don't know what would have happened if Kevin had started, Sergio had started.

"Fernandinho is not fit and John played so well there (in the League Cup tie) at Leicester, I wanted to give him another situation. He played well. He was quick, except once on the ball in the beginning."

The afternoon had looked routine for City when Ilkay Gundogan rose to meet Fabian Delph's 27th-minute cross and headed in the opening goal.

City had not lost any of their previous 52 league games against teams outside the traditional "big six", a run dating back nearly two years to a defeat at Everton in January 2017.

- Quickfire Palace -

But Palace turned the game on its head with two goals in as many minutes just after the half hour.

First, Stones' challenge on James McArthur pushed the ball to Jeffrey Schlupp, who capitalised on some uncertain defending from Kyle Walker, driving the ball past him and diving keeper Ederson.

Just two minutes later, a free-kick was headed out by Bernardo Silva to Townsend and the former England winger connected with an incredibly well-executed, first-time left-foot volley that soared above the diving Ederson from fully 30 yards.

Guardiola brought on Aguero early in the second half but, almost immediately, City fell further behind when Aaron Wan-Bissaka's cross found the head of Townsend, whose effort struck the right-hand post.

Max Meyer gathered the rebound, forcing a panicked Walker into making a challenge referee Andre Marriner judged to be a foul and Luka Milivojevic showed admirable composure to convert the penalty.

De Bruyne sparked a late City fightback, and scored an 85th-minute consolation with a deep cross that floated over the head of Vicente Guaita and into the goal.

"Today was one of those bonanza days," said winning manager Roy Hodgson.

"You get your work rate as it should be, you get your shape and discipline as it should be, then you also score goals.

"To score three goals away from home against a team of this quality says a lot... and makes you wonder where they have been up until now."