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GOAL GLUT
Fernando Morientes, who came on for Crouch in the 56th minute, added the fourth following a dummy by Garcia.
Left back John Arne Riise struck a blistering fifth 20 minutes from time after running on to a neat flick from Gerrard.
Seven minutes later, City substitute Olivier Tebily tried to block Harry Kewell's low cross but only succeeded in turning the ball into his own net.
One minute from time, Taylor let a shot from the right by substitute Djibril Cisse slip under his body for the seventh, rounding off a nightmare evening for the home side who are also fighting for survival in the Premier League.
"It's damaged us, let's hope not beyond repair," said City manager Steve Bruce.
The few chances Birmingham had were firmly dealt with by the steady Liverpool defence and goalkeeper Jose Reina.
Liverpool's England centre-back Jamie Carragher made a fine tackle on Mikael Forssell as the striker threatened to score midway through the first half and Jamie Clapham was just wide of the far post with a shot on the stroke of halftime.
Forssell was on target in the 63rd minute but his stinging shot on the turn was parried by Reina.