Lee Martin's second goal of the season wasn't enough for Town as Blues lost 2-1 to Birmingham at St Andrew's.
A double from Nikola Zigic saw the hosts take all three points, despite a much improved performance from Town.
Blues also had strong shouts for a penalty turned down in the second half and in the end left the Midlands empty handed.
Paul Jewell made five changes to the Town starting line-up, most notably with new loan signing Alex McCarthy making his debut in goal.
Tommy Smith replaced Damien Delaney in defence, while midfield duo Andy Drury and Lee Martin also return to the starting-line up.
Striker Jason Scotland, who scored against Hull last time out, was preferred to Nathan Ellington up front.
The game became a tense affair almost immediately, with Blues skipper Grant Leadbitter seeing a shot blocked after four minutes in the early exchanges.
However shortly after Town were behind, as the hosts took the lead with their first attack of the game after nine minutes. A long throw into the box by David Murphy wasn't deal with by the Town defence and Zigic was in the right place at the right time, to glance a header past McCarthy and into the far corner.
Birmingham came close to extending their lead after 16 minutes, but Zigic this time could only power a header into the side-netting after connecting with Chris Burke's in-swinging corner.
But Town were soon back on level terms thanks to a brilliant strike from Martin with 18 minutes played.
After collecting 'keeper McCarthy's long punt upfield, the winger skipped past a couple of challenges before unleashing a left-footed drive that flew beyond the reach of Boaz Myhill and into the far corner.
Debutant McCarthy was looking impressive in goal and he did well to hold on to another Zigic header from close range after 26 minutes.
Yet it was Town who were looking the more dangerous going forward and Leadbitter was denied by a great save from Myhill after 33 minutes, with the midfielder whipping in a free-kick that was destined for the corner before the City 'keeper pushed the ball away to safety.
Blues then went close again to taking the lead, six minutes before the break. Daryl Murphy beat Jonathan Spector in the air and the ball fell to Scotland, who laid into the path of Drury whose shot was well blocked by Stephen Caldwell.
That was the last piece of notable action of the first-half as the referee blew for half-time with the scores level.
Birmingham made a change after the break, with 'keeper Myhill being replaced by Doyle, and the new stopper was almost picking the ball out of the net three minutes after the restart, but Scotland's effort deflected just wide of the Republic of Ireland keeper's post from eight yards, after cutting inside his marker.
Chris Hughton's side did respond to this Town pressure and went close after 53 minutes, but Spector's pull back was just behind Marlon King and Martin was able to clear the danger.
The hosts were looking to retake the lead and came close to doing so after 63 minutes. Good play by Burke down the right saw him beat Cresswell for pace and cross for King, but as the former Coventry striker went to let fly Carlos Edwards made a superb last ditch block to divert the danger away from goal.
Town responded soon after with Cresswell crossing for Scotland, who did well to hold the ball up and play in Martin, but the winger couldn't add to his goal as he fired just over from the edge of the area.
The game was becoming an end-to-end affair and moments later Birmingham were on the attack, with Keith Fahay crossing to the back-post for Zigic who saw his goal-bound header kept out well by McCarthy with 21 minutes remaining.
The lively Burke was causing problems on the right flank and he crossed for Zigic who was just beaten to the ball by the outstretched leg of Ibrahima Sonko after 71 minutes.
A minute later Burke laid the ball into the path of King and the striker let fly from 20 yards, only to see his drive come back off the upright with McCarthy well beaten.
Town had strong claims for a penalty waved away by referee Robert Lewis with nine minutes remaining. A Fahey back header fell into the path of Martin who appeared to be brought down by Caldwell but the shouts came to nothing as the referee waved away the protests.
Burke had another chance for the hosts, but he fired over after beating Cresswell in the area.
But it wasn't to matter as Zigic scored his and Birmingham's second of the night to win it for the hosts, after prodding past McCarthy from close range after Town again failed to clear their lines from a long throw in from Murphy.
The referee soon blew for full-time and Town will now focus towards Saturday's home game against Blackpool.
Birmingham: Myhill (Doyle 46), Spector, Davies, Caldwell, Murphy, Burke, Beausejour (Redmond 73), Fahey, Gomis (Mutch 81), Zigic, King. Subs not used: Ridgewell, Rooney.
Town: McCarthy, Edwards, Sonko, Smith, Cresswell, Martin, Leadbitter, Drury, Murphy, Emmanuel-Thomas (Ellington 73), Scotland (Chopra 79). Subs not used: Lee-Barrett, Ainsley, Carson.
Att: 16, 528 (569 visiting fans)