Town started 2012 with defeat, after losing to Nottingham Forest by three goals to one at Portman Road.
Goals from Marcus Tudgay and Garath McCleary saw Blues behind at the break, before skipper Grant Leadbitter pulled a goal back from the penalty spot.
Forest wrapped up the win when Tudgay added a third late on.
Paul Jewell made two changes to the starting line-up that lost to Reading last time out, with Ivar Ingimarsson replacing the suspended Ibrahima Sonko and Andy Drury coming in for Michael Chopra.
Right-back Jack Ainsley was named on the bench in place of Reece Wabara, who returned to Manchester City after the game at the Madejski Stadium.
Drury was eager to make an impression and he tested Lee Camp inside the first minute, but the Northern Ireland international was equal to the shot.
However it was the visitors who made the brighter start to the game and Tudgay should have opened the scoring after just four minutes, but he fired over Arran Lee-Barrett's bar after being sent through on goal.
But the striker made up for that miss by firing Forest in front a minute later. Town failed to clear the ball, which was worked on to Tudgay and the former Sheffield Wednesday man made no mistake, firing the ball emphatically past Lee-Barrett and into the top corner.
Steve Cotterill's side could have extended their lead after seven minutes as McCleary dribbled into the area before laying the ball off to Lewis McGugan, but the midfielder dragged his shot wide.
Town responded to this sustained Forest pressure and were unlucky not to draw level after ten minutes, with Daryl Murphy flashing a left-footed drive from the edge of the area just wide of Camp's post.
Blues were beginning to get a foothold on the game and were unlucky not to equalise after 19 minutes. Damien Delaney headed across goal for Jay Emmanuel-Thomas to head at goal, but he found Camp standing in his way as the 'keeper held onto the ball well.
Lee-Barrett had to be alert soon after, parrying well from a George Boateng effort after 23 minutes.
That was a warning sign for Blues though, as just two minutes later Forest doubled their lead through winger McCleary. Town again failed to clear the danger and McCleary tricked his way past Delaney before firing into the top corner to further enhance The Reds' lead.
McGugan was looking a threat for the visitors and he almost scored a third for Forest with a long range effort that dipped just the wrong side of Lee-Barrett's goal.
Town looked for a way back into the game and Carlos Edwards was unlucky with right-footed drive from 25 yards that Camp did well to keep out.
The Trinidad international then crossed for Daryl Murphy after 37 minutes, but the Celtic loanee saw his header again kept out by Camp.
A minute later and Town again tested Camp in the Forest goal, and this time beat him, only to see Emmanuel-Thomas' long range effort come back off the underside of the crossbar.
Blues again went close on the stroke of half-time, with Murphy firing over from close range, before the referee blew his whistle to signal the end of the first half.
It was Forest who started the second half the brighter though and Tudgay was denied a second goal of the game by a great save from Lee-Barrett, who clawed out the forward's header at the near post.
Just two minutes after the interval and the visitors again missed a good opportunity to increase their lead. McCleary went past Cresswell before crossing for Reid, who saw his goalbound effort cleared off the line by Edwards, whilst McGugan could only fire the loose ball wide of Lee-Barrett's goal.
The midfielder than tried his luck from a free-kick just outside the Town box, but again failed to test Lee-Barrett as his shot went over the crossbar.
Town did then come back into the game and Martin fashioned a chance for Blues after beating Chris Gunter down the left flank before crossing into the box, but neither Emmanuel-Thomas nor Murphy managed to have a shot at goal, as the Forest defence closed down the pair.
Emmanuel-Thomas was looking lively for Town and he flashed a dangerous ball across the six yard box that Chopra was unlucky not to get on the end of in the 71st minute.
A minute later and substitute Nathan Ellington went close with a header from a Drury cross that flashed just wide of Camp's post.
But Town did pull a goal back shortly after through skipper Leadbitter. Emmanuel-Thomas danced his way into the box before being brought down by a number of Red shirts, with referee Carl Boyeson pointing to the spot.
Leadbitter duly converted the spot-kick, despite the ball hitting the inside of both posts before nestling in the bottom corner.
But Town's lead lasted just three minutes as Tudgay scored his second of the game, and Forest's third, glancing a header beyond the reach of Lee-Barrett, after being picked out by Andy Reid's cross.
Emmanuel-Thomas was still looking lively and he tested Camp from just outside the area with eight minutes remaining, that the Forest 'keeper did well to turn behind for a corner after taking a light deflection.
Town couldn't force a way back into the game and began 2012 with defeat.
Blues are next in action on Saturday, travelling to Hull in an FA Cup third round tie.
Town: Lee-Barrett, Edwards, Delaney, Ingimarsson, Cresswell, Martin (Ellington 70), Bowyer (Chopra 42), Leadbitter, Drury, Murphy (Carson 65), Emmanuel-Thomas. Subs not used: Wright, Ainsley.
Forest: Camp, Gunter, Chambers, Moussi, Cunningham, McCleary (Derbyshire 82), McGugan, Boateng, Reid (Bamford 90), Greening, Tudgay. Subs not used: Smith, Meadows, Majewski.
Att: 18, 964 (800 visiting fans)