An end-to-end game saw each side squander a number of chances, as well as the referee, Michael Oliver, dismissing a couple of strong penalty appeals.
He did point to the spot early on in the second half after Liverpool’s Roberto Firmino was fouled by Gael Clichy, allowing James Milner to open the scoring against his old club.
Sergio Aguero then equalised for City in the 69th minute to set up an exciting end to the match, with both teams going for the victory, but failing to find a winner.
The result leaves City in third on 56 points, one ahead of the Reds, who remain fourth.
Manchester United had earlier closed the gap to the Champions League places with a 3-1 win at Middlesbrough, whilst Tottenham are now two points ahead of City after beating Southampton 2-1.