Gerard Houllier's side were undermined by their casual approach and lacklustre finishing as they failed to finish off the game following Robbie Fowler's superb half-volley in front of England coach Sven-Goran Eriksson.

Just as against Roma in midweek, they sat back on a lead but still escaped a second time even after a penalty by Darren Purse had drawn First Division Birmingham level in injury time.

For although Trevor Francis's side dominated extra-time as they took the game to a shattered Liverpool side, they were unable to make the breakthrough and had their hearts broken in the ensuing shoot-out.

That it was Blues' substitute Andrew Johnson whose final penalty was saved by Liverpool keeper Sander Westerveld was especially cruel, given that he had been his side's main inspiration.

Westerveld, who has lately come in for some criticism, also denied Martin Grainger and while Dietmar Hamann failed, Gary McAllister, Nick Barmby, Christian Ziege, Robbie Fowler and Jamie Carragher all found the target.

Birmingham, for whom substitutes Johnson and Bryan Hughes made all the difference, while their defence grew in stature as the game went on, had certainly produced a display of which they could be proud.

However, it was Liverpool who qualified for Europe and while their long-term aim is challenging Manchester United for the title, securing their first trophy since 1995 was still a notable stepping stone on that long path.

For since they last won the league title in 1990, the only major silverware that has lined the Liverpool trophy room has been the 1992 FA Cup and that 1995 League Cup.

United may show no signs of relaxing their stranglehold, with their incredible 6-1 win against Arsenal earlier in the day taking them a massive 21 points clear of Liverpool after just two games more.

However, there was understandable roars of delight as Fowler, the only member of the Liverpool team who had previously picked up a winner's medal with the club, lifted the trophy in Cardiff's Millennium Stadium.

Birmingham, who last won a major trophy in 1963, were meanwhile left to reflect on a superb run to the final in beating Tottenham, Newcastle and Ipswich, and a memorable comeback even if it turned sour at the end.

In reality though, they should never have been able to level the match as Liverpool had only themselves to blame for their countless wasted chances in normal time.

In a scrappy first half, Houllier's side had the clear edge and Fowler had the first chance, completely missing his header from Vladimir Smicer's inviting cross.

When Smicer then played through Gerrard, the midfielder was wrongly deemed offside and Martin O'Connor, who tripped him, therefore escaped any chance of being sent off.

Birmingham continued to be penned back, even if Liverpool's passing game was still only flickering into life, and the First Division side only had a weak shot by Jon McCarthy to show for their first-half efforts.

Liverpool did finally make the breakthrough, with the build-up coming straight from the route one manual as Westerveld's huge clearance was flicked on by Emile Heskey.

Fowler nevertheless applied a finish of the highest quality, sweeping home a 25-yard half-volley on the turn which flew over the head of keeper Ian Bennett and dipped under the crossbar.

The match hardly sparked into life thereafter, with Smicer lifting one shot just wide.

Birmingham's attack had meanwhile centred only on Geoff Horsfield's power but was revived at the break by the arrival of Johnson and he almost immediately put the First Division side level.

As it was, the story of the second half was largely of a litany of missed Liverpool chances as Fowler, Heskey and Smicer all failed to finish off the game.

Houllier's side then committed the cardinal sin of relaxing in the final minutes and they duly paid the price.

With just seconds left, Henchoz brought down O'Connor in the penalty area and up stepped 24-year-old centre-back Purse to produce the perfect spot-kick despite the overbearing pressure.

So to extra-time, with Birmingham now re-energised and substitute Hughes lifting one shot over the bar before almost beating Westerveld with an inspired 30-yard chip.

The Blues were now not only dominating possession but also producing the better football, with Francis enraged as referee David Elleray failed to award a second penalty as the faltering Henchoz tangled with Johnson.

Liverpool were clearly rattled. So was the post, however, by Hamann as Houllier's side at least launched a late fightback of their own, with Fowler and Hyypia also coming close.

Penalties were needed to separate the two sides and the tension was palpable.

Westerveld's save from Grainger immediately put Birmingham on the back foot and, despite the unlikely sight of a German - Hamann - failing to score, Liverpool still came through. But only just.

Teams

Birmingham Bennett, Eaden, Grainger, Purse, Michael Johnson, McCarthy, Sonner (Hughes 71), O'Connor, Lazaridis, Horsfield (Marcelo 80), Adebola (Andrew Johnson 45).

Subs Not Used: Poole, Holdsworth.

Goals: Purse 90 pen.

Liverpool Westerveld, Henchoz, Babbel, Hyypia, Carragher, Smicer (Barmby 83), Hamann, Gerrard (McAllister 78), Biscan (Ziege 96), Heskey, Fowler.

Subs Not Used: Arphexad, Owen.

Booked: Hamann, Henchoz.

Goals: Fowler 30. Liverpool win 5-4 on penalties

Att: 73,500

Ref: D Elleray (Harrow-on-the-Hill).